Residential growth in the city core may remain its biggest hope
Calgary’s downtown faces many difficulties, including huge office vacancies resulting from the mid-decade oil bust and the rise of remote and hybrid work accelerated by the pandemic.
Calgary’s downtown vacancy numbers are depressing for those of us who enjoy vibrant downtowns. A report to the City Council Executive Committee from the Planning and Development Services Department notes that, since 2015, downtown property values have dropped $16.4 billion, a reduction in office building value of 67 percent. This drop in property values has reduced city revenues and led to the lost tax base being redistributed to commercial and residential properties outside the downtown.
Things are so desperate that Calgary has adopted an aggressive program to reduce its downtown office footprint. With 14 million square feet vacant, the city has adopted the “Downtown Calgary Incentive Program,” which aims to reduce downtown office space by six million square feet by 2031 to help address vacancy rates and stabilize property values over the next decade.
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The most significant element of the program is the “adaptive reuse” of office space into housing. Adaptive reuse has been used in many downtowns, such as Lower Manhattan, where much of the Woolworth Building, once the tallest in the world, is being converted to residential. New York Mayor Eric Adams has proposed a program to convert 136 million square feet of office space to 40,000 housing units over the next decade. In downtown Los Angeles, 12,000 housing units have been created through adaptive reuse since 2000, according to a Rand report, which finds considerable potential for additional development. The Los Angeles Conservancy indicates that the downtown resident population has risen from 18,000 in 2000 to nearly 80,000 in 2020.
Having worked in downtown Los Angeles for 15 years, I have developed a strong admiration for adaptive reuse. Even some of the much later buildings from the 1950s and 1960s in Los Angeles have become residential.
The city of Calgary’s proposals would convert up to 14 buildings into residential, which would add over 2,000 housing units and reduce empty office space by two million square feet.
In addition, the city has added a “Post-Secondary Institution Program,” which began with an agreement for the University of Calgary School of Architecture, Planning and Landscape to occupy former office space downtown. This program is being made available to other college and university programs as well.
Perhaps the most interesting element of Calgary’s program is the newly added “Downtown Office Demolition Incentive Program,” which would remove 200.000 square feet of “inefficient and end-of-life buildings that negatively impact downtown vibrancy.”
Calgary, of course, is not alone in its excess inventory of downtown office space, but its adaptive reuse and even demolition could represent a cautionary tale for many other downtowns, including downtowns in metros like San Francisco, Portland, Seattle, Chicago, Washington, and New York, Melbourne, Sydney and Toronto and elsewhere.
Another key element leading to Calgary’s downtown difficulties is the substantial drop in transit work trips.
In the Calgary metropolitan area, the number of work trips on transit dropped by more than 50 percent between the 2016 and 2021 censuses, while the number of people working at home nearly quadrupled. In 2016, transit accounted for nearly twice as much job access as working from home. By 2021, working from home was almost five times that of transit. Because of the differing environments between 2016 and 2021, this may not be a valid comparison, but it does indicate that the potential for working from home is very high.
Calgary’s downtown is facing a challenging future. Further, with advances in artificial intelligence, hybrid and remote working could well make downtowns less competitive than even now, at least as places for business. Residential growth may remain the biggest hope.
Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston, a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.
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