Calgary transforms old offices to apartments; experts say other cities should follow

A Canadian city is shining a light on a novel solution to rising office vacancy rates and a severe housing shortage affecting the nation. Calgary has been successful in its unique strategy of transforming office towers sitting at a 30% vacancy rate into residential living spaces through an innovative incentive scheme for builders. In just two years, the plan has led to the approval of 13 conversion projects, with another four pending approval. The first conversion project, a $38 million 10-story office building soon to house 112 apartments, is nearing completion.

Calgary's downtown development incentive offers building owners $75 per square foot to repurpose underused office buildings into residential units. Unveiled in 2021 following an oil price crash and COVID-19's fallout, the program led to the reinvigoration of the city's lagging economy and its real estate sector. The plan's overwhelming popularity led to a temporary halt in October 2023 after hitting its $253 million funding cap.

Calgary's initiative may present a viable strategy for the rest of Canada, which is grappling with a severe housing deficit. The Canada Mortgage and Housing Corp. estimates that 3.5 million new units are needed by the end of this decade to provide affordable housing. With downtown office spaces in many cities being underutilized due to the popularity of working from home post-pandemic, Calgary's approach serves as a potential solution.

Commercial property vacancy rates in Toronto, Vancouver, Ottawa, Edmonton, and Montreal all exceed 12.5%. These cities would benefit from Calgary's model, especially as they navigate the aftermath of a COVID-impacted office market. Developers are encouraged to overcome the architecture and design challenges in the conversion process by banking on the faster project schedules, reduced carbon footprint, and the added stimulus that such converted buildings can bring to languishing downtown areas.

Increasing project completions are encouraging developers and architects to explore more building candidates. Numerous developers across Canada have expressed interest in learning from Calgary's novel approach. This strategy is being proposed as a possible nationwide solution to Canada's mounting housing crisis in the event of government incentives.

First reported by The Canadian Press on Jan. 7, 2024.