Calgary downtown office vacancies keep pressure on recovery

Calgary’s downtown office market improved slightly in the second quarter of 2026, with Cresa reporting vacancy at 26.96 per cent and positive absorption of roughly 362,000 square feet — the first positive quarter in more than a year. CBRE similarly reported a return to positive net absorption, with demand strongest in Class AA buildings as tenants continue to favour newer towers with better amenities. Even so, the overall vacancy rate remains exceptionally high, and the recovery is uneven across the market.

Part of the problem is that Calgary continues to deal with the consequences of energy-sector consolidation. Recent mergers and acquisitions have pushed additional sublease space into the core, with Cresa noting that transactions involving major oil and gas companies have added pressure to an already oversupplied market. Older buildings remain especially vulnerable: Cresa put Class C vacancy at 38.83 per cent in Q2, compared with 17.49 per cent for Class AA space. That widening gap suggests the downtown recovery is increasingly being driven by a flight to quality rather than a broad rebound across all office classes.

City Hall is trying to reduce the oversupply by permanently removing outdated offices from the market. Calgary’s Downtown Office Conversion Program is supporting 21 projects representing 2.68 million square feet of converted space, with plans for 2,667 homes, a 226-room hotel and other new uses. The city’s longer-term goal is to remove six million square feet of underused office space by 2031, but its own supporting analysis says more than 12 million square feet of vacant downtown office space still remains — roughly the equivalent of six empty Bow Towers. The conversion program is changing downtown’s mix of uses, but the latest market data shows Calgary still has a long way to go before vacancy stops defining the core’s recovery.