Calgary’s downtown office vacancy rate hovers just above 24%, ~1.5% lower than at year end 2018, yet still 14% higher than a balanced market vacancy rate. This continues to be driven by the significant headwinds faced by our domestic oil and gas sector, including egress constraints, limited access to capital, political hurdles and regulatory challenges. As of Q2 2019, there were 183 TSX/TSX-V listed oil & gas issuers, and 54 energy services issuers with a combined market value of ~$250 billion. These issuers have raised only ~$300 million of equity YTD across 47 financings at deeply discounted valuations relative to historical norms.
Colliers believes high vacancy rates will continue to prevail in the near term, offset to some extent by new or emerging industries, and reverse migration by firms to the downtown core from the suburban office market. We continue to see reverse migration of beltline and suburban occupants into the downtown core in the wake of higher quality space in buildings flush with amenities, at attractive prices. The increase in property taxes to buildings located outside of the downtown core also contributes to this trend.
Since Q1 2017, over 1,000,000 square feet has been absorbed downtown by tenants from the suburban and beltline markets, as well as tenants outside of Calgary.
Two other notable trends in the near term include the growth of co-working spaces, and the expanded application of workplace innovation & strategy. Co-working companies continue to add meaningful new square footage in Calgary, which we see as a natural fit with highly cyclical industries like the Canadian oil and gas sector, and high growth or emerging technology companies. Along this same vein, in a market where it is increasingly hard to attract and retain top talent and equally difficult to increase compensation for employees, greater focus is being placed on the interaction of space and building with the overall employee experience.
Going forward, Colliers Calgary intends to separately publish more in-depth thematic pieces in between quarterly reports on these topics.