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“We use public investment to build homes in the city center and win private investment in our center,” said Mayor Joti Gondek.
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April 27, 2022 • 4 hours ago • 3 minutes reading • 5 comments HAT @ Arts Common (205 9 Avenue SE), one of the first three approved projects of the Calgary Center Stimulus Development Program, Wednesday, April 27, 2022 Photo by Azin Ghaffari / Postmedia
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Three towers in downtown Calgary will be the first in the city to turn vacant offices into housing under a new incentive program.
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The projects, announced Wednesday, will remove 414,000 square feet of downtown office space from Calgary’s struggling market and replace it with 401 housing units.
The city is contributing $ 31 million to the conversion of an office into a home. The money comes from the $ 100 million council for last year’s transformation projects as part of the Calgary Center Stimulus Development Program.
Mayor Joti Gondek described the move as “transformative” for the city’s core, saying it would stimulate activity in the center of spaces that were previously underused or underused.
She said the projects will also create jobs in construction and add more diverse housing opportunities to the market.
“We use public investment to build homes in the center and win private investment in our center,” Gondek said.
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The largest of the three projects is Palliser One, on 125 9th Ave. SE, which will convert 200,000 square meters of office space into 176 apartments, with completion scheduled for 2024.
The HAT @ Arts Commons project on 205 9th Ave. SE added another 113 housing units, and the final design of 909 5th Ave. SW will bring 112 apartments plus retail space in a building that has been vacant for nearly a decade.
In the three towers, the renovated office space represents about three percent of the total number of vacant offices in the center.
Pictured is Palliser One (125 9 Avenue SE), one of the first three approved projects by the Calgary Center Stimulus Development Program, on Wednesday, April 27, 2022. Photo: Azin Ghaffari / Postmedia
Overall, Gondek said the city is aiming to remove six million square feet of downtown office space through conversion or demolition in a bid to stabilize the commercial real estate market, which has been fluctuating for years. The percentage of vacancies in the city center was 29.7% in the last months of 2021.
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The city is reviewing applications for eight more office buildings seeking access to funding for the conversion, with additional announcements expected in the coming weeks and summer. Developers will receive city funding when the projects are completed.
The mayor’s office subsidy to renovate offices is helping to make the projects economically viable, said Rob Blackwell, CEO of Aspen Properties, developer of Palliser One.
“It’s more than how much it costs compared to the new one. That is, we have an asset that is underused, and to make better use of it, you can try to rent it as an office or take a new path, create a new direction, “he said. For us, it’s not doing anything instead of doing something.
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Renovating an office building to create living spaces comes with a range of logistical and engineering challenges, said Maxim Olszewski of Peoplefirst Developments, the group behind the 909 5th Ave project. SW.
“You have to keep in mind the huge amount of work involved in changing all the mechanical parts of the tower,” Olszewski said, citing air circulation and heating and cooling systems that require a complete overhaul of the conversion.
The 909 5 Avenue SW building, one of the first three approved projects of the Calgary Downtown Development Program, on Wednesday, April 27, 2022. Photo: Azin Ghaffari / Postmedia
These considerations mean that not all office towers are viable candidates for housing conversion, according to Sarah Itani of the Cidex Group of Companies.
She said that the main consideration for developers is the amount of leasable space in a building. There are fewer leased spaces in residential buildings than in office towers, Itani said, with the owners bearing the cost of the common areas.
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“There’s a lot of inventory on the market, and I think that’s where you’ve noticed the increased interest in the program, but not all offices can be converted,” said Itani, whose company is redesigning The HAT @ Arts Commons.
Property appraisal values will vary depending on the project, but Calgary Center Strategy Director Tom Mahler said he expects those appraisals to increase as the transformation is completed.
Mahler said the city plans to open its subsidies for conversion outside housing projects in the future, allowing transformations for use in post-secondary or cultural areas, for example.
“This will expand the scope of these types of buildings,” Mahler said. He added that there is a feeling that investment in existing office space in the center will begin to improve after years of stagnation.
“As the city center picks up speed, people feel things are changing. We somehow got out of the really bad place we were a few years ago, when all we were talking about was unemployment and a sharp drop in property taxes.
jherring@postmedia.com
Twitter: @jasonfherring
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