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Calgary's office market continues to face significant challenges, with the vacancy rate climbing to 30.7% in the second quarter of 2025. This marks a 50 basis point increase, extending a concerning trend despite a period of relative stability and even gains in oil prices over the past two years, and proactive local initiatives aimed at revitalizing the downtown core.

The persistent high vacancy rate underscores a fundamental shift in Calgary's business landscape. While the resurgence of the oil and gas sector has brought positive economic indicators to the city overall, it hasn't translated into a corresponding surge in demand for traditional office space. Several factors are contributing to this disconnect.

Remote Work's Enduring Impact: The widespread adoption of remote and hybrid work models, accelerated by the pandemic, remains a primary driver of decreased office occupancy. Companies are re-evaluating their real estate needs, opting for smaller footprints or foregoing traditional office spaces altogether. This trend shows no signs of slowing down, forcing landlords to adapt to a new reality.

Conversion Efforts Fall Short: While there have been notable efforts to convert vacant office buildings into residential units or other uses, these conversions have not yet made a substantial dent in the overall vacancy rate. The process is complex, requiring significant investment, navigating zoning regulations, and addressing structural challenges inherent in older office buildings. The pace of conversion is simply not keeping up with the rate of office vacancies.

Economic Uncertainty & Future Outlook: Broader economic uncertainty also plays a role. Businesses are hesitant to commit to long-term leases in a volatile environment, further contributing to the downward pressure on demand. Looking ahead, the Calgary office market faces a challenging period. Landlords will need to be increasingly flexible, offering competitive lease rates and amenities to attract and retain tenants. Creative solutions, such as co-working spaces and flexible lease agreements, are likely to become more prevalent.

What this means for Calgary: The high vacancy rate has implications for the city's tax base and overall economic health. Addressing this challenge requires a collaborative effort involving government, developers, and the business community. Strategies might include incentivizing conversions, attracting new industries, and fostering a more diverse and resilient economy.

Key Takeaways:

• Calgary's office vacancy rate reached 30.7% in Q2 2025, a 50 basis point increase.
• Remote work continues to significantly impact office occupancy rates.
• Conversion efforts are underway but haven't yet significantly reduced vacancies.
• Economic uncertainty is contributing to cautious business investment.