Mark Kolke, Leasing Specialist - Representing Tenants - search, select, negotiate - Representing Owners - office, industrial, retail


Commercial Real Estate Specialist. Leasing office space in Calgary and Edmonton is our primary focus. We act for tenants and buyers, and for sellers of land

Mark Kolke

January 26, 2013

Mark Kolke, 2013 outlook for Calgary commercial real estate market, in particular office space

It is difficult to forecast anything with precision. Large firms and research organizations get it significantly wrong as often as they very right. My observations are based on what I see crossing my desk and what I see as a ‘market watcher’, observing issues that drive the market in Calgary:

-          oil & gas activity, particularly commodity prices

-          oilsands ‘geopolitics’ because it drives the long term future of the Alberta economy and a large component of the Calgary workforce (and absorption of office space)

-          net in-migration to the province and particularly to Calgary 

Employment stats and project activity is strong – which contrasts, obviously, with gloomy fiscal news from the provincial government over financing ongoing servies and infrastructure requirements in Alberta. Also of concern is the shifting sands of world economies that impact us – Europe, U.S., China and market behaviours of OPEC countries. And, the big game-changer in this oil and gas driven marketplace, is shale. Day to day, the issue seems to be ‘fracking’ or, hydraulic fracturing.  That’s a method with its own share of controversies, but the bigger message is one of unlocking previously unavailable oil and gas from shale formations. The science will improve and become more environmentally friendly. The most immediate impact is a growth of U.S. production which makes that country far less dependant on imported oil, including Canada’s – which lead me to discuss the other game-changer of late, pipeline politics.  Canada, is a more significant player here than is Alberta alone – because the country’s economy relies so heavily, as does Alberta, on royalty and tax revenues. Having Alberta’s resource held hostage to the ‘bitumen bubble’ price variation and lack of capacity to move all that bitumen, upgraded bitumen and synthetic crude by pipelines is a huge economic problem for producers and governments – so, indeed, politics will trump economics and business interests to proceed with the required deal-making to increase pipeline capacity to the west coast and through the Keystone XL border crossing.  Long winded, I know, but stay with me.  The issue affecting the Calgary market in the coming year is one of confidence. Confidence in the boardrooms of oil companies, of all companies exposed to oilsands (producers, pipelines, suppliers, contractors and engineering firms) as to what will happen and, more importantly, when it will happen.  Momentum tends to cascade. Layoffs will be necessary tools for some firms. Mergers and acquisitions will keep the law firms busy and the securities folks with plenty of paper to sell, but at the end of the day, the issue is one of confidence in Mr. Harper to see the Keystone XL and Gateway projects through to eventual completion. Railways will catch the slack in the meantime, but the bit issue is ‘down the road’ pipeline capacity, period. 
Also at work in all of this, is the confidence the Province of Alberta can support the ongoing infrastructure requirements over the next 10 ten years in the oilsands region to support the harvesting of a 50-75 peak production period for oilsands – while, at the same time supporting the huge appetite for government funded services by the citizens of Alberta. This was evident in Premier Redford’s recent televised ‘conversation’ about the fiscal realities of large deficits vs. future expectations.
Day to day, despite the prognostications, I had the busiest December and January in recent memory which tells me, and weekly searches for availability prove the case, office space continues to be in short supply.  At the moment there is an abundance in 3,000-4,000 sq. ft. pockets downtown and in the beltline, but most other size requirements continue to be tight.  Landlord expectations seem to be softening because they suffer the same confidence fears as the rest of this marketplace. Better to have a lower than expected return on good tenants you can secure than to let them go to a competitor, which is a shift from the ‘landlords dictating terms’ we saw so much of over the last year or  two.
The market in most other North American markets remains soft, fueled more by hope than reality – the U.S. economy and its politicians boast of improvement, but so far not nearly enough has been seen to foster significant growth in capital investment and robust business activity that fills coffers and creates large numbers of jobs.
The best, and probably only robust place on the continent delivering on all those is Calgary. In-migration of skilled workers continues to tilt and support the housing market, oilsands development continues to raise capital easily, as do oil & gas producers working in shale formations and wet gas. As for dry-gas, those folks are struggling for survival as prices remain at prolonged ugly lows due to supply glut and oncoming LNG dynamics that will make natural gas a truly global commodity . . .
My prediction?  A strong 2013 for everyone with a well diversified business. For those needing debt to survive, those over-bloated with expensive unnecessary overhead or for those 'one-trick ponies', a very tough year indeed for their executives, employees and shareholders . . . .

Commercial Real Estate Specialist. Leasing office space in Calgary and Edmonton is our primary focus. We act for tenants and buyers, and for sellers of land


December, 2012

Lost velocity has returned to the Calgary market – and it will be buoyed by news of the Progress Energy and Nexen takeovers!


However there are three recent developments which colour the landscape – Imperial Oil announced they are moving 900,000 sq. ft. of activity to Quarry Park, CPR announced they will relocate its head office to a new building at the Alyth yards, and Brookfield announced its plans for stage 1 – to be Calgary’s tallest building – of a full city block development on the old Calgary Herald site downtown.


Suburban vacancies remain plentiful while smaller suite availability downtown are in shorter supply. Having said that, Tenants in all Calgary sub-markets have a reasonable spectrum of options to choose from. Large-block users are not usually looking for older space, or to move in a hurry – so their options are several, both in buildings under construction or planned to start soon. Based on construction timing for new buildings for Imperial Oil and CPR – and barring a slumping economy – the downtown market is expected to remain tight for the next year.  Demand has been driven by organic growth and newcomers to the market, primarily by companies involved in oilsands development.



Mark Kolke
MaxComm Realty Advisors / Max
Well South Star Realty 
888 - 3rd Street SW, Suite 1000, Calgary, Alberta - T2P  5C5
Phone: 403-444-6939

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Mark Kolke, Realtor™, is an Associate under contract to MaxWell South Star Realty

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