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Tech companies are slowly taking hold in Calgary’s hollow downtown

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CALGARY – In the nearly two years since the COVID-19 pandemic forced workers out of downtown Calgary towers and into home offices, the heart of the city has changed.

Most of the changes are subtle. On 4th Ave SW, the 1980s Sun Life Plaza building is now The Ampersand – redeveloped and modernized by business owner Aspen Properties with the aim of attracting the startups and businesses of the future.

In the revitalized East Village neighborhood, the massive $ 80 million parking lot the city opened last spring is home to not only car and bike stands, but also Platform Calgary, a non-profit that will provide a incubation space for startups and programs for entrepreneurs.

On 1st St. SE, 79,000 square feet of space in First Tower is now occupied by local software company Symend, which rose to prominence in 2020 after receiving $ 73 million in a funding round. .

But perhaps the most significant change Calgarians will notice if they return to the office in 2022 is the makeup of the downtown workforce itself. For the first time in Calgary’s history, an urban core that was once almost solely the domain of the energy sector and the various companies that serve it is home to a small but growing contingent of tech workers.

According to commercial real estate company CBRE, Calgary saw its ranks of tech workers increase 17.9% between 2015 and 2020, an increase of 46,700 workers. Calgary also moved up six spots last year to rank 28th in the 2021 CBRE Scoring Tech Talent report, which ranks 50 North American markets based on their ability to attract and develop tech talent.

“We used to have a few tech companies, but they occupied, I would say, less than 250,000 square feet of downtown. Which is a drop in the bucket, ”said Greg Kwong, Calgary-based regional general manager of CBRE.

“Now, they represent between 5 and 8% of the space occupying the heart of the city center. It’s still pale compared to the oil field, which occupies about 80 percent, but it’s not bad.

Calgary has worked hard in recent years to diversify its oil and gas-based economy and boost its burgeoning tech sector. It is also trying to tackle its downtown vacancy problem, which has served as a dramatic illustration of the city’s economic fortunes in recent years.

Between the end of 2014 and the first quarter of 2020 – a period defined by low oil prices, downsizing of businesses and economic stagnation – the commercial vacancy rate in downtown Calgary fell from 9. 8% to 26.6%.

That rate has since risen due to the impact of COVID-19 and the sharp drop in the price of oil in 2020. (The price of crude has since hit seven-year highs, but energy companies remain well below their figures for 2014 in terms of staff).

The city’s downtown commercial vacancy rate stood at 32.9% in the third quarter of 2021, according to CBRE. That’s 43 million square feet of rental space, and it’s by far the highest vacancy rate downtown of any major city in the country.

But as oil and gas tenants moved out of the downtown area, it created opportunities for tech startups to move in. Prime commercial real estate that once priced at $ 30 per square foot is now selling for closer to $ 10.

“Of the major markets, Calgary is now one of the cheapest alternatives for technology companies,” Kwong said. “Much lower than Vancouver, Toronto and Montreal. If you compare us to Kitchener-Waterloo, which is a hotbed of technological activity, it’s about the same.

Calgary-based fintech company Neo Financial, which now has 400 employees since its founding in 2019, is among those banking on a downtown future. The company plans to officially announce in January that it has leased 60,000 square feet of office space (the exact location has yet to be disclosed).

Neo Financial co-founder Andrew Chau (who also co-founded Winnipeg food delivery giant Skip the Dishes) said being downtown makes it easier for talent-hungry tech companies to attract young people. workers who want to live in an urban environment and have access to public transport and amenities.

At the same time, he said Calgary’s tech sector wanted to play a role in helping revive the downtown core and tackling the city’s economic challenges by creating jobs and filling vacant homes.

“The more we can attract this critical mass of exciting and fast-growing tech startups and companies to downtown, the better,” said Chau. “Because that’s how we’re going to kind of reduce that 30% vacancy rate. Obviously, we won’t fix it overnight, but we can continue to develop and gradually return to what we were before. “

City officials have suggested that it will take decades, not years, to resolve Calgary’s empty office tower crisis.

But Susan Thompson, knowledge manager for Alberta at commercial real estate firm Avison Young, said there were reasons for optimism, including the city of Calgary’s decision last year to approve. spending $ 200 million for downtown improvements.

Thompson also pointed out that the “trophy buildings” of downtown Calgary – Category AA buildings which represent one-third of the total office market, have a combined average vacancy rate of 7.7%, proving that high-quality space in a downtown location remains attractive.

“We’ve seen a number of these buildings try to reinvent themselves to attract a different type of tenant, especially the tech industry versus the old-fashioned oil and gas industry,” Thompson said. “As they (the tech industry) start to approach that critical mass, it’s really going to start to grow faster.”

This report by The Canadian Press was first published on January 1, 2021.

Amanda Stephenson, The Canadian Press