Office vacancy rates in the trendy Beltline neighborhood of Calgary, Canada, currently run at nearly 25 percent, according to the latest figures by commercial real estate firm Avison Young. Stuck with empty offices, some Calgary landlords are getting the itch to convert empty spaces into other uses.
That’s what the owner of a vacant five-story office in Calgary’s Beltline is doing. Avenue Living Real Estate Opportunity, the building owner at 1011 First Street S.W., recently got approval from the city zoning board to convert the upper floors of the empty office into self-storage, according to CBC. The ground floor will still have commercial and retail use. The building owner plans to apply for a development permit soon.
Canada’s office vacancy rate hit 15.7 percent in the third quarter of 2021, the highest level since 1994, according to CBRE. In the U.S., the picture isn’t much brighter in primary markets. Vacancy rates averaged 16.7 percent in major U.S. markets like New York, Los Angeles, and Chicago, tracked by Avison Young. Secondary office markets like San Jose and Dallas are faring better.
Many office landlords are looking at adaptive reuse more seriously lately, but it isn’t always feasible. Forty-one percent of multifamily conversions came from old office spaces in 2020 and 2021, according to a report from apartment search site RentCafe. However, those numbers belie how difficult and expensive it is to convert an old office building to multifamily use.
Office conversions to self-storage could be a simpler and more attractive option, as evidenced by the owner in Calgary. The self-storage sector is incredibly hot right now, as the U.S. occupancy rate averaged 96.5 percent in 2021 Q3, according to Yardi Matrix. Adaptive reuse isn’t an easy decision, but more office owners may consider it this year as primary office markets continue to lag.