How do you make bricks and mortar flexible?
It’s a challenge faced by the commercial real estate industry as the high-tech industries take hold in Calgary.
Technology-driven businesses grow fast and shrink fast, leading to short-term leases for companies that might have five employees now and 20 or 100 in six months.
Carla Fedele, research director at Royal LePage Commercial Inc., says landlords have developed the “flex building” in response.
Suburban business real estate often has offices at the front with light assembly work and the shipping department at the back. Flex buildings can be converted to all-office or all-industrial as needed.
The real estate business reflects the new economy companies, says Alex Brough, vice-president and general sales manager at the Royal LePage branch.
He and Fedele point out that business has changed for landlords and facilities managers.
“Landlords used to say: ‘Here’s my building; will you fit it?’ ” says Brough. “Now the new economy people say: ‘Here’s my company. Please build something for it.’ ”
Thus, new buildings are under construction while other offices have vacant space.
Fedele says 1.4 million square feet of offices are under construction in Calgary, including downtown and the suburbs. Other projects are proposed. Brough says oil and gas are still the drivers of downtown growth, with technology dominant in the suburbs.
Along with the oilpatch, the large law and accounting firms are downtown, as are some financial institutions and telecommunications companies, he adds.
The Warehouse District and the Beltline are home to the offices of life insurance companies, financial advisers, media and marketing companies and smaller information technology companies.
With a highly concentrated mix of residential, office and retail uses, the Beltline is the home of the creative — “the left-brained type of business,” says Brough.
Northeast of downtown, wireless technology businesses hold sway, led by companies such as Wi-Lan and Nortel. Technology is the driver, says Fedele. “ . . . If it has anything to do with wireless technology, the northeast is where it will be,” says Brough.
In the south end of town, agricultural, insurance and engineering companies are dominant. That’s where you’ll find numerous smaller, owner-user buildings, says Fedele.
The northwest is home to professional services and research buildings, but little mass market office space. There may be a need for it, but it hasn’t developed, he says.
The top floor of the four-storey Lorraine Building on 12th Avenue S.W. has been leased and lower floors are still available.
The former apartment block was damaged in a fire three years ago and bought about a year later by lawyer Neil Richardson, who also has interests in restoring heritage real estate.
Planning and other behind-the-scenes work on the restoration began at that time. Renovation work is now underway to convert the structure to offices. It should be ready for tenants in March, says Richardson.
The annual rate of housing starts was up 4.9 per cent across Canada in October but fell nine per cent on the Prairies, according to the Canada Mortgage and Housing Corporation.
The seasonally adjusted annual rate was 164,800 units in October and 157,100 in September.
In Alberta, actual housing starts were down to 1,784 units from 2,027 in September, moving the seasonally adjusted annual rate to 20,800 from 23,700.
Meanwhile, building permit values are still rising in Calgary. City hall announced recently that $244.5 million worth of building permits were issued in October, up 113 per cent from the $114.6 million issued in October last year.
The city received 1,202 building permit applications, up from 1,093 in October 1999.
Residential building permits were up 47 per cent in value.
Non-residential permits were up 246 per cent, totalling $132.8 million, compared to $38.3 million a year earlier.
Permits are a measure of the intentions of builders, not actual construction starts.
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