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Imperial Oil

Fleeing downtown Calgary

This is an interesting trend.  Is the rent too high in downtown Calgary?  

Imperial Oil is on the move. Now Canadian Pacific Railway. The big question is who is next to make the jump from downtown Calgary as prices escalate and tenants look for better rents away from the core.

“You add them together and you get 1.2 million square feet and that’s a big chunk,” said Ross Moore , head of research with CB Richard Ellis Canada, in referring to the two companies. “There is a limit to how high you can push rents.”

Imperial announced in September it would move its downtown office to a 20-acre site away from the downtown with five low-rise buildings and 800,000 square feet. Then last week CP Rail said it would move its employees as part of a cost-cutting plan.

“Everybody is focused on costs and real estate is obviously part of your costs,” said Mr. Moore, who wonders whether the trend will curtail some of the planned development expected to go ahead shortly. “They all have to be having second thoughts.”

Third quarter statistics from CB Richard Ellis show rents overall in Calgary’s downtown core climbed 4.4% from just three months before to $26.79 per square foot per year, making it one of the most expensive places in North America. The vacancy rate for what is considered a AA building is a scant 0.5% which has pushed rates up.

Of course the answer is no as it is market driven.  CPR is cutting costs and Imperial Oil has it’s own strategic reasons to move to a very large campus but it is extremely interesting to see how expensive rent is in downtown Calgary.