Competitive Calgary Symposium: Innovation, Investment, Diversification
November 24, 2017
In November 2017, GWL Realty Advisors was a key sponsor of two events organized by ULI Alberta focusing on the future direction and growth of downtown Calgary. In helping to lead this event, GWLRA is helping generate proactive solutions for the rising office vacancy rate in downtown Calgary.
Calgary, Alberta faces challenges. Major restructuring in the energy sector has left a large gap in the city’s economy and the downtown office market, which is now over 25% vacant with 12 million square feet, empty. This declining role of the oil industry in Calgary also presents an opportunity to re-envision downtown Calgary for the 21st century.
The first activity was an invitation-only roundtable comprised of a diverse group of professionals that included: office owners and managers, tenants, a large tech start-up, city planners, housing developers, politicians, office developers, architects, academics and other stakeholders to have a frank discussion of the problems, solutions, and opportunities facing Calgary’s downtown. From GWL Realty Advisors were Tom Sullivan (Senior Vice President, Asset Management) and Amy Vandervelde (Director, Portfolio Management and ULI Alberta Chair) who chaired the meeting with event co-sponsor RJC Engineering.
A panel discussion, which drew over 100 in attendance followed and is the focus of this write up. The panel, moderated by University of Calgary Haskayne School of Business lecturer and newly-elected city councilor Jyoti Gondek consisted of:
- Bryan De Lottinville, Founder & CEO of Benevity (A Calgary based tech start-up with over 400 employees focused on corporate and workplace engagement);
- Reid Henry, President & CEO of cSpace Projects (a firm that designs multi-disciplinary creative workspaces); and
- Rob Blackwell, Senior VP Investments & Asset Management with Aspen Properties
Calgary’s strengths of having a labour force that has high levels of volunteerism, a solid work ethic and a entrepreneurial “get things done” mentality were identified as positives for the city’s economy, as were great regional amenities, relative housing affordability (compared to Vancouver, Toronto and other North America gateway cities) and the strong track record of attracting newcomers to the city. These factors, the panel noted, provide a solid foundation around which to build a city that is economically prosperous and diversified.
Moderator Jyoti asked the panel about how to bring new investment and people to Calgary.
Reid Henry expressed that industry stakeholders need to “explore what good urbanism is. Learn what the expectations are for living in a global city in the 21st century, and put Calgary in that context.”
Indeed, the panel did just that, and more.
All recognized that for Calgary, a key challenge will be remaking the downtown core into a place where non-energy companies and their employees want to be. Right now, the district largely empties at 5pm. Many of the streets (save for Stephen Avenue Walk) are uninviting both day or night, owing to a lack of retail and restaurants, and in some cases poor street lights and sidewalks.
Rob Blackwell, an office landlord and developer, commented on how the focus historically for most landlords was how to cram more 10X15 offices into a floor. Integrating technology or improving the overall worker experience were not a focus. Today, some landlords are scrambling to add amenities such as fitness centres and wellness opportunities such as yoga to stay attractive. However, all panelists, especially Bryan De Lottinville insisted that this will not be enough if the broader neighbourhood is not where the talent wants to be. As the CEO of a 400-person tech company, he needs to locate his business where his employees want to be—and right now, that is not downtown Calgary.
Creative talent—broadly defined—prefers to be in dynamic urban environments with residential, fitness, retail, restaurants, workplaces, and more. Reid Henry pointed out artists, like many creative professionals, are looking for inspiration; they also want to be in proximity to other like-minded individuals, whether for inspiration or collaboration.
The group also discussed how Amazon’s RFP for a second headquarters (HQ2) reinforces this tech employer and worker preference; the Amazon requirement is for a “pedestrian friendly” urban or downtown campus. With or without Amazon, if Calgary is to expand its nascent tech sector into an economic driver, and attract other growth sectors, remaking the downtown will be important.
The empty office space in downtown Calgary presents an opportunity. Half of the vacancy is in older buildings, which could be repurposed. At the earlier Round Table event, the group discussed creating a 20 year vision for downtown Calgary—an overarching plan that could be broken into manageable components. Components of this 20 year vision could include bringing more university activity into the core, adding student housing, creating market and non-market housing—all of which would support more street level retail, café and restaurant activity; all of this would make the downtown more walkable, urban and inviting.
The panel also went beyond normal urban planning topics, noting the need to educate a creative, knowledge economy and technology workforce. Calgary has numerous STEM graduates, but they tend toward being petro chemical engineers, geologists—not computer scientists. Calgary and Alberta could prioritize offering more spaces in computer science in related university and technical college programs. Benevity currently has close to 60 job opportunities which require specific technical skills (particularly software engineering) and it is difficult to find the talent despite the current unemployment rate.
Panelists pointed out that creativity, innovation and solutions happen when people from different backgrounds collaborate. These two events on November 8 illustrated the value in bringing all stakeholders to the table to discuss solutions—and the groups vowed to keep talking and to continue working together.
Based on discussion GWLRA is hearing from key actors in Calgary, as well as our ongoing analysis of this region’s economy and demography, we are optimistic about the long-term future of downtown Calgary.
Any statements in this report concerning future financial performance of the Fund are subject to, among other things, risks, uncertainties and assumptions about the Fund, economic factors and real estate markets generally. They are not guarantees of future performance, and actual events and results may differ materially from those expressed or implied by forward-looking statements included in this report.
Leading the national Research and Strategy team, Wendy’s responsibilities include providing economic, demographic and market-trends analysis to support long-term asset acquisition, development and management strategies. Wendy has been working in real estate research since 2002, including over a decade with GWL Realty Advisors. She holds a Ph.D. in comparative-world and economic history from the University of Arizona.