Date of publication: Apr 27, 2022 • 3 hours ago • 3 minutes reading • 5 comments HAT @ Arts Common (205 9 Avenue SE), one of the first three approved Downtown Calgary Development Incentive Program projects on Wednesday, April 27, 2022. Photo by Azin Ghaffari / Postmedia
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Three towers in downtown Calgary will be the first in the city to turn vacant offices into living spaces as part of a new incentive program.
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The projects, announced Wednesday, will remove 414,000 square feet of downtown office space from Calgary’s troubled market and replace it with 401 housing units. The city is contributing $ 31 million to office-to-home conversions. That money comes from the $ 100 million board that was earmarked for conversion projects last year as part of the Growth Incentive Program in downtown Calgary. Mayor Jyoti Gondek described the move as “transformative” for the city’s core, saying it would boost downtown activity in areas that were previously underused or unused. He said the projects would also create jobs in construction and add more different housing options to the market. “We are leveraging public investment to build homes in the city center and win private investment in our city center,” Gondek said.
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The largest of the three projects is Palliser One, at 125 9th Ave. SE, which will convert 200,000 square feet of office space into 176 apartments, with a goal of completion by 2024. The HAT @ Arts Commons project, at 205 9th Ave. SE, adds another 113 housing units and the final project on 909 5th Ave. SW will bring 112 apartments plus retail space in a building that has been empty for almost a decade. In all three towers, the renovated office space accounts for about 3 percent of the total downtown office space. Pictured is Palliser One (125 9 Avenue SE), one of the first three approved Downtown Calgary Development Incentive Program projects on Wednesday, April 27, 2022. Photo: Azin Ghaffari / Postmedia In all, Gondek said the city aims to remove six million square feet of downtown office space through conversion or demolition, in a bid to stabilize a commercial real estate market that has been shaking for years. The vacancy rates in the city center stood at 29.7 percent in the last months of 2021.
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The city is considering applications for eight more office buildings seeking access to conversion funding, with further announcements expected in the coming weeks and summer. Developers will receive city funding when the projects are completed. The town hall subsidy for office conversions helps make the projects financially viable, said Rob Blackwell, executive at Aspen Properties, the developer of Palliser One. “It’s more than just how much it costs. “It’s that we have an asset that is underused and to make better use of it, you can try to rent it as an office or follow a new path, set a new direction,” he said. “For us, it is to do nothing instead of doing something.”
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Renovating an office building to create sustainable spaces is accompanied by a number of logistical and engineering challenges, said Maxim Olshevsky with Peoplefirst Developments, the team behind the 909 5th Ave project. SW. “You have to keep in mind the huge amount of work required to replace all the mechanical parts of the tower,” Olshevsky said, referring to the air circulation and heating and cooling systems that require a complete overhaul of the conversions. The building at 909 5 SW Avenue, one of the first three approved projects of the Calgary Center Development Incentive Program on Wednesday, April 27, 2022. Photo: Azin Ghaffari / Postmedia These thoughts mean that not all office towers are viable candidates for housing conversions, according to Sarah Itani of the Cidex Group of Companies. He said a major concern for developers is the amount of rental space in a building. There is less rental space in residential buildings than in office towers, Itani said, with landlords covering the cost of common areas.
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“There’s a lot of stock in the market and I think that’s where you saw the growing interest in the program, but not all the offices can be converted,” said Itani, whose company is re-developing The HAT @ Arts Commons. Real estate appraisal values will vary by project, but Calgary Center-based director of strategy Thom Mahler said he expects those appraisals to increase as the conversions are completed. Mahler said the city plans to open conversion grants beyond residential projects in the future, allowing conversions for uses in post-secondary or cultural sectors, for example. “This will expand the range of opportunities for these types of buildings,” Mahler said. He added that there is also a sense that investment in existing downtown offices will begin to improve after years of recession. “As the city center grows, people feel that things are changing. “We have gotten away from the very bad spot we were in a few years ago, when all we were talking about were job vacancies and a sharp drop in real estate taxes.” [email protected] Twitter: @jasonfherring More news, fewer ads, faster upload time: Get unlimited, ad-lite access to the Calgary Herald, Calgary Sun, National Post and 13 other Canadian news sites for just $ 14 / month or $ 140 / year. Register now through Calgary Herald the Calgary Sun..
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