Calgary office market report
Q1 2025
Summary of Q1 office market activity
After a strong 2024, Q1 2025 sees subdued activity amid economic uncertainty
A relatively modest quarter saw negative 179,503 square feet (sf) of absorption citywide. Tenants were active in Q1, however, a lack of “pen to paper” led to a slight increase in the overall vacancy rate. Ambiguity has overshadowed the broader economy, stalling market momentum.
Downtown evolves with new mergers and office repurposing
The downtown office market was stable in Q1 2025. Negative absorption of 103,042 square feet (sf) was recorded, resulting in a slight increase in vacancy to 24.8%, up 0.2% from Q4 2024.
Efforts to address the issue of underutilized office spaces are gaining momentum. Among these initiatives is a collaborative project between the City of Calgary and the University of Calgary to relocate the School of Architecture, Planning, and Landscape into 200,000 sf of space at 801 Seventh Avenue SW. The space, which will be utilized for teaching and research, demonstrates a forward-thinking approach to revitalizing dormant premises in the downtown core. Meanwhile, the recent merger of Whitecap Resources and Veren Inc. was announced in March, as consolidation in the energy sector continues to be a prevailing theme for the downtown office market.
Beltline shifts towards short-term leasing
The Beltline recorded negative absorption of 38,996 sf this quarter. Landlords are implementing capital improvement strategies to support efforts to drive leasing activity. Tenant preferences, on the other hand, tend to prioritize short-term leasing arrangements, while incentives such as free rent allowances are showing signs of moderation.
Stability in suburban office market demand
This quarter, net absorption for suburban office space amounted to negative 43,632 sf. The suburban office market has remained stable by offering tenants an abundance of leasing options, accessibility, and amenities.
Economic uncertainty slows overall leasing activity
Demand for high-quality office space remains robust, even as the supply of premium spaces is constrained. This has driven up the costs for tenants seeking to upgrade, leading many to carefully evaluate their options before making a move. In this environment, older buildings have a unique opportunity to remain competitive by investing in capital improvements to enhance the quality of their spaces. However, with office construction at historic lows and no significant new inventory expected soon, the market faces additional pressures from a projected 3% rise in construction costs driven by tariffs.
The added pressure of economic and political uncertainty is prompting many companies to prioritize lease renewals over relocations or upgrades, contributing to a slowdown in leasing activity.
Downtown vacancy rate
Beltline vacancy rate
Suburban vacancy rate
Overall vacancy rate
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