Stakeholders in office-to-residential conversions claim that such projects are an important component of Calgary's strategy for absorbing surplus office space. Conversions are faster than new buildings and are marketed as a means to get more people into the city center. Proponents argue that redoing rather than razing saves energy and resources.
Canada’s office real estate market has faces many challenges over the past 2 years with the highest vacancy rate seen since the mid 90’s.
Approximately six million square feet of downtown Calgary must be leased, transformed, or modified in order to stay competitive. Despite all the discussion of office conversions, just a few conversions have taken place.
Condo conversions face stiff competition from increasingly vibrant and innovative inner city condo projects.
Those searching to buy a unique home in Calgary’s downtown looking for opportunities may have to wait a while for more to come along. Among those conversions already completed, The Westley Hotel has been built on the former location of Birchcliff Energy Ltd.'s headquarters. In 2019, the CUBE building, a recent office-to-residential conversion, opened its doors. Sierra Place is a $30 million affordable housing development that will open in 2022.
Because it is near to public transportation and across the street from a food store, the CUBE building was an ideal showcase and proof of concept to demonstrate that such conversions are a viable option to Calgary’s real estate market. According to architect Ken Toews, many buildings are too long or too broad to be considered for office conversion.
In September, the firm obtained a pledge from the city for an eventual $7.5-million in financing, and they are presently going through the application process with the city.
According to CBRE regional managing director Greg Kwong, office-to-residential conversions are part of Calgary's goal to diversify the city's economy. The technique, according to Kwong, "won't alter the course of history, but it will assist."
At this time, we would encourage property investors and home buyers alike in Calgary to watch this trend keenly, but know that many of these projects are simply a proof of concept to demonstrate the possibility of such conversions to investors and regulators. Those looking for immediate options in the Inner city can find a wealth of great conventional options on the market already.