By Don R. Campbell
The reality behind the real estate headlines is often forgotten. Many of these stories focus solely on the property and the stats, but what we must all remember is that behind those obvious numbers is a human story. A story that is not as easily dismissed or debated. We see this here again in the story of the major office vacancies in Calgary. Let’s take a look at it:
There is a scramble to fill skyscrapers dotting Calgary skyline. It may look like a real estate story but frankly it is not. It is a story much sadder than that; it is really a story of unemployment and family struggles combined with a new regulatory/government environment that will make it even more difficult to bring these jobs back. Each empty office means one job fewer.
So how will this play out on the real estate side? Well, in downturns in residential markets, supply begins to exceed demand and competition heats up for sales, driving prices lower. This reality leads to the buyers and renters moving towards newer properties, which they can now get at the same price that older properties used to sell for.
What we will witness in this downtown Calgary market is a migration of companies from older buildings to newer towers. Which, in turn, will put pressure on those who own older buildings to spend money on renovations while reducing their rents. This will put them in a difficult place for future or current financing.
A second negative economic ripple will be felt in retail, coffee shops, restaurants, parking garages and all of the supporting small businesses in the downtown core. As these small businesses struggle from a lack of customers, we will then witness many of those businesses closing and thus increasing the vacancies and unemployment in the downtown even further.
Until we witness job creation of a big scale return to downtown Calgary, this negative ripple in the core will sadly continue. Remember, this is not a real estate story; it is a human story and until those who can help through regulatory relief or incentives do help, an increasing number of families will suffer.
Here's my discussion on Calgary radio about this important subject: http://omnyapp.com/shows/the-morning-news-with-bruce-kenyon/downtown-acre-club