Calgary Council: $250M Office Conversion Gamble Escalates

CALGARY — The city is throwing $250 million at a ghost town problem, and the bet is simple: turn empty office towers into something people actually want before downtown becomes a permanent write-off.

Calgary's core is bleeding space. Vacancy rates are sitting above 25%, thanks to energy giants like Suncor and Cenovus deciding they need fewer desks after their mega-mergers. The result? Entire floors sitting dark while the tax burden shifts to everyone else still paying rent.

Enter the Downtown Calgary Development Incentive Program, the city's Hail Mary to yank 3 million square feet of office space off the market by 2026. The deal: $75 per square foot in grants if you can turn a dead tower into apartments, hotels, or anything that isn't another vacant cubicle farm.

Energy Sector Left the Lights Off

The damage traces back to 2025's energy consolidation spree. Suncor swallowed TotalEnergies assets. Cenovus kept squeezing efficiencies out of its Husky merger. Both moves made office space redundant faster than landlords could pivot.

CBRE and Avison Young have been tracking the carnage quarterly, and the numbers don't lie: downtown Calgary has more empty square footage than most cities have total inventory. That's not a soft market. That's a crisis with a lease agreement.

City Doubles Down

Mayor Jeromy Farkas and City Council just threw another $103 million into the pot this past November, backing the play started under former Mayor Jyoti Gondek. The program, managed by Director of Downtown Strategy Thom Mahler and the Calgary Municipal Land Corporation, is now funding conversions beyond just residential—think office-to-hotel, institutional space, whatever keeps the lights on.

Private developers like Strategic Group, Aspen Properties, and Peoplefirst Developments are already in on projects like Palliser One and The Cornerstone.. But the friction point? Construction costs and interest rates are making the math ugly, even with city cash sweetening the deal.

The Clock's Ticking

A November 2025 Planning & Urban Development Committee meeting signed off on new applicants and marked progress on existing projects. The goal remains locked: hit that 3 million square feet target by 2026 and stabilize property assessments before the tax shift crushes what's left of downtown's commercial tenants.

The final push is underway. Whether Calgary can reinvent its core or just watch more towers go dark depends on how many developers can make the numbers work before the deadline hits.