The Construction Season of our Discontent?

Murphy's Law of Calgary Traffic: 'The shortest distance between two points is under construction.'

I watched off the balcony last night as the demolition team started to dismantle the historic Mescalero/Underwood Block on 1st street, the beginning of the work to build the double tower condo complex of Union Square. The end of another era.....

I've heard that Batistella ran into financing problems for Union Square and now that the construction start is a year behind schedule, they're most likely fast-tracking this one and working late nights despite fines from the City for breaking noise by-laws.

Everywhere around us at all times of the day, there are construction teams building towers, towers, and more towers. The subfloors of the Sheldon M. Chumir Health Centre are done and the infrastructure is beginning to go up (there are two huge cranes that fly over 4th street occasionally), and the Millenium Towers project and the other one across the street (name escapes me now) from each other are both underway. Traffic and pedestrian woes will surely ensue. The ugly parkade at 9th ave. and 2nd st. is now history and the building of Banker's Court is now underway. The re-vamped building across 1st st. from the Palliser is halfway done as is the new tower on Penny Lane and the new Court Complex on 5th st. is nearly complete.

The first quarter of 2006 saw over $1 billion dollars in commercial real estate transactions. That’s $1 billion in three months. And that is only counting those properties that sold for $1 million or more.

There are currently plans for nine new skyscrapers in the core, including Banker’s Court, City Centre, Centennial Place, Livingston Place and of course, the much-hyped tower planned by the Encana Corporation. Altogether these new buildings will hopefully add five million sq. ft. of office space by 2010.

There is word that a double tower (City Centre) will soon be underway underneath Calgary Tower and the new EnCana Tower (which will be the tallest skyscraper in Western Canada, second tallest in the country) is due to start in 2007 between 5th and 7th Ave. downtown. The IBM complex on 11th Ave. is underway and the revamped office building at the corner of 5th St and 11th Ave SW is nearly done. This is just what is happening in my neighborhood.

This has certainly been a nutty building season in Calgary. It's hard to fathom the volume of construction that is going on. The signs of boom insanity are everywhere. I hope that things keep rolling along here economically as everyone expects for awhile yet otherwise we're going to end up in the same horrible mess the city was in the early 1980s. It's pretty neat to be witness to all this newness if you can survive the noise, traffic crunch and skyrocketing prices for everything.

The city is always playing catchup to its stellar growth. With a hundred people moving to Calgary everyday, many projects are either getting fast-tracked or mothballed due to the pressure on building materials and skilled workers. Things change from day-to-day.

Hopefully this all equates to more dense living in the downtown core. I'd like to stay focused on the good benefits of this - more people, more businesses, more amenities, however with all the good comes the bad. The homelessness problem is getting very bad downtown, and the fact the heated economy is leaving many new arrivals without living accommodations is very frustrating. There have been a few ingenious ways to combat this problem that have started. One example in the Best Western Hotel in southeast Calgary, which is allowing new staff to rent rooms in the hotel until they can find something more permanent. Both residential and commercial vacancy rates in the inner city are under one percent!

From 2006-09-29 Calgary Herald:

Office rates hit $50 a square foot

A dire lack of supply combined with a burgeoning demand for downtown office space has pushed asking rental rates to unprecedented levels in Calgary. The average lease price has hit $35 to $37 a square foot, a whopping $12 increase from a year ago and more than 50%, with some landlords asking for the previously unheard of $50 level for certain prime locations. Downtown is becoming so pricey that some companies are choosing to move their operations outside of the core into the suburban office market. A downtown market report by Barclay Street Real Estate says the downtown office market vacancy rate is at 0.4%, the lowest in the world, and has created "continued upward pressure on rental rates and limited to zero options for those companies with immediate office space requirements." The report says four new buildings totalling about 1.1 million square feet of office space are set to be completed in 2007 but 100% of this office space has already been pre-leased and about 650,000 square feet of new space is anticipated for delivery in 2008 with that also 100% pre-leased. "Simply stated, those companies requiring office space immediately or through to 2009 will be paying a considerable premium due to demand significantly outpacing supply," says the report.

Lea Chambers, manager of corporate services and marketing for Golder Associates, said the company will move from its current location downtown to a new building at Memorial Drive and Barlow Trail in the fall of 2008. The company has been in its current building for 10 years. "Our reason for moving or seeking a new space is capacity. We project our staff will be growing by 10 to 15% in the next two years and we simply cannot stay in this building because there is not enough room for all of our staff," said Chambers. Christopher Ridabock, president of J.J. Barnicke Calgary, said it has been Calgary's tradition for oil and gas tenants to be in the downtown, but "this is changing with tenants moving to the Beltline and beyond." "The greater Calgary office market continues its downward slide in vacancy and its ramping up of rental rates," said Ridabock. "With the downtown core now at a North American record low for availability . . . asking rates for any space has increased dramatically, with some landlords asking over $50 net for smaller office blocks in top buildings.
(Calgary Herald 060929)