Calgary Herald Article: City Centre tower set to start construction
Building to be completed by March 2016
By Mario Toneguzzi, For the Calgary Herald | April 4, 2012
Construction on a 36-storey office tower near Eau Claire will begin next month after developers Cadillac Fairview confirmed the project Wednesday.
The Calgary City Centre development will bring about 850,000 square feet of office space to the downtown city block that housed the French Maid and Don Quixote's, among several businesses.
The building, part of a larger development at 2nd Street and 3rd Avenue S.W. that will include retail space, a hotel and condominiums, is to be ready for its first tenants by March 2016.
"Calgary City Centre reinforces Cadillac Fairview's strategy of expanding our core property assets, office and retail, in key urban markets," said president John Sullivan.
Downtown office space was leased at a record rate last year after a strong 2010, said Bruce Graham, president of Calgary Economic Development.
"It's a reflection that we're into a new development cycle as the projected space availability has literally vanished before our eyes far more quickly than expected," Graham said. "If this absorption trend continues, we're going to run out of space before we get new space built.
"It puts pressure on the development community and the city to fast-track the development and building of new product."
Wayne Barwise, executive vice-president of development with Cadillac Fairview, said the City Centre development will transform the area by linking four city blocks with three Plus-15 bridges.
The vacancy rate for premium office space in downtown Calgary is one of North America's lowest, at 1.3 per cent, he said.
"Office occupancy levels in Calgary correlate very closely to oil and gas capital expenditures," Barwise said. "And at this point in time there is a tremendous amount, over $60 billion in oil and gas capital expenditures, that's taking place. That is the primary catalyst."
New office space opened after the last development cycle - almost six million square feet in total - has been filled, Barwise said. Companies looking to expand will find little contiguous space of more than 50,000 square feet available.
Barwise said leasing for the City Centre project is already strong, with some major ten-ants to be announced soon. A marketing suite will open later in the spring.
"There's about 4.4 million square feet of tenants in the market today looking to potentially expand or move their premises and that outpaces the current supply, the new supply that's in the pipeline," Barwise said.
With the Bow tower nearing completion, it's anticipated more development in the office market will take place.
Eighth Avenue Place has begun construction of its second office skyscraper and it's believed other towers will move forward at the old Herald Block, and the Eau Claire Tower in the west part of that area.
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