No municipal administration wants the vacancy rate to approach 30% in its downtown offices. However, this is the situation in Calgary, which has a population of nearly one and a half million and is the largest city in the province of Alberta.

In response to this problem, the city of Calgary is actively working to convert unused office towers into residential housing through a unique grant program.

This strategy has now become a model for all municipalities suffering from a housing shortage.

In just two years, 13 projects to convert office buildings into residential apartments have been approved, and four more projects are currently under consideration.

The first project, which converted a 10-story office building into a residential building with 112 apartments at a cost of $38 million, is nearing completion and is expected to receive its first tenants in the coming months.

For his part, Walsh Manas, a capital markets assistant at Avison Young commercial real estate, said: "It is something that can succeed in any big city, especially in Canada where, in my opinion, we all struggle to build enough housing."

A unique program

The Calgary Downtown Development Incentive Program, which provides $75 per square meter to building owners wishing to convert unused office space into residential apartments, is a unique program in North America.

This program was launched in 2021, at a time when the city, home to more corporate headquarters per capita than anywhere else in Canada, was facing a long-term decline in oil prices and the effects of the COVID-19 pandemic.

Commercial real estate values downtown also collapsed due to a wave of layoffs and mergers in the energy sector, leaving nearly one-third of downtown office space vacant.

With the aim of filling nearly 1.25 million square meters of vacant space and increasing its tax base, the city of Calgary launched the incentive program to fill more than 555,000 square meters of vacant office space in downtown Calgary by 2031.

Cheryl MacMullen, who manages this program for the city of Calgary, did not know what the reaction would be when the initiative was launched.

However, the program proved so popular that in October 2023, the city had to temporarily stop after its $253 million funding was exhausted.