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Back  |  June 02, 2015  | 

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Mayor Nenshi is currently on a three-day economic development tour in New York City to encourage businesses and investors to Be Part of The Energy of Calgary. Below is an excerpt from a Bloomberg Business article based on an interview with the mayor. You can read the full article here.

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The oil price downturn is creating a building opportunity for commercial real-estate developers in Calgary, home to Canada’s petroleum industry, rather than deterring investment, Mayor Naheed Nenshi said.

"Our downtown commercial market is very strong and we’re getting a lot of folks saying they had been priced out of Calgary and now here’s their chance," he said Monday in an interview at Bloomberg’s headquarters in New York. "I’m told by these very, very large skyscraper builders and commercial property developers, mostly backed by pensions, that they are patient money, and they make their money by building at this point in the cycle."

Nenshi has recently met with a property developer planning a new C$600 million ($478 million) tower for the city, and there are two or three others with similar plans, he said, declining to name the investors.

Skyscrapers including the Bow, designed by British architect Norman Foster and the tallest building west of Toronto, have sprouted in Calgary’s downtown in past years as an oil boom supported a surge in employment. While the slide in crude prices over the past year resulted in thousands of job losses in the city, commercial and residential construction has continued as the population grows.

Last year, Calgary’s population increased by 40,000 people, contributing to a 16 percent gain in the past five years to about 1.2 million, while the growth in energy, manufacturing and retail jobs kept unemployment below the national average. About a third of Calgary’s $116 billion economy is dependent on the petroleum industry, down from about 55 percent 20 years ago, Nenshi said.

Calgary’s commercial vacancy rate has risen to about 11 percent, a "healthy" level, after years of tenants having a difficult time finding space, he said.

Cushman & Wakefield’s latest quarterly report showed Calgary’s office vacancy at 8.5 percent in the first quarter, up from 6.3 percent last year. The rate compares with 7.7 percent in Toronto in the first quarter. Vacancy in Toronto’s financial core is the lowest in the city at 4.8 percent, compared with 9.8 percent in Calgary’s central core, Cushman and Wakefield said.

The city expects the value of building permits this year to decline to C$5 billion from C$6.5 billion in 2014, according to Calgary Economic Development, a city agency.

"We’re now moving in a world where there’s a little bit more breathing room," Nenshi said, adding that he sees little chance of a property bubble, either in Calgary or in other cities in Canada, including Vancouver or Toronto.

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Categories: Economic development; Interviews; Better economy

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