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Calgary will pay owners to demolish vacant downtown office towers

Incentives meant to help remove empty space in a core with a 30 per cent office vacancy rate
Calgary has 13.5 million square feet of empty office space, 4 million of which the city considers “end of life.” | Western Investor file

The City of Calgary council voted this week to provide incentives to demolish vacant downtown office towers.

“The Downtown Office Demolition Incentive Program incentivizes the demolition of buildings that are deemed ‘end-of-life’ and are not suitable for conversion or reuse,” according to a city statement.

“The program will support non-office redevelopment and the creation of new public amenity space. Currently, $3 million in funding exists for this program, and additional funding sources may be identified in the future pending grant interest and demand.”

Downtown Calgary has been plagued with empty office space for years. Currently, with a nation-leading 30 per cent vacancy rate, there is 13.5 million square feet of vacant space, according to Colliers.

Four million square feet of this, mostly older stock, is deemed worthless as offices and could be used to increase vibrancy and property values in the core, according to the city.

The demolitions will “remove excess office space from downtown, support downtown vibrancy and ultimately support the city’s fiscal sustainability by restoring downtown property values,” said Natalie Marchut, manager, development and strategy for the city’s downtown strategy.

The city has been offering incentives to convert offices to residential, with limited success.

Last November it approved $9 million to support the conversion of vacant office space to house the University of Calgary’s School of Architecture, Planning and Landscape. A new Downtown Post-Secondary Institution Incentive Program follows this pilot project in an effort to convert vacant offices to post-secondary use.

The overall aim of the city has been to remove 6 million square feet of downtown office space. To date, about 2 million square feet has been converted to other uses.

Under the demolition incentive, the city will provide grants of $15 per square foot of space that’s demolished to owners of eligible buildings. This is estimated to be half the cost. There is also $5 per square foot available if hazardous material, such as asbestos, needs to be removed from an older building.

The current $3 million budget, however, would only cover the cost of removing a 200,000 square foot office tower, a small step in the actual vacant office space downtown.

Applications for the demolition incentives will begin in May 2023.