As reported in the Calgary Herald, an office-to-residential conversion in Calgary’s Beltline neighbourhood is being praised as a creative response to the city’s economic downturn.

The seven-storey, 62,000-square-foot building on the corner of 11th Avenue and 11th Street S.W. was an aging office complex about to be vacated by its last tenant when its owner, real estate developer Strategic Group, decided to give it new life. Strategic spent $25 million renovating what was once called the Stephenson Building and repurposing it as “Cube” — a residential rental apartment building with 65 one- and two-bedroom units, starting at $1,600 a month. The first tenants moved in May 1.

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Strategic Group CEO Riaz Mamdani said the company took the significant step with the understanding that Calgary’s downtown office vacancy rate is not going to return to normal levels for at least a decade.

“Is it better to have residential income in the next 10 months and spend $25 million doing it, or wait it out and hope for something different to happen? That’s the decision we had to make and that was the tough decision,” Mamdani said.

Although Calgary’s downtown office vacancy rate has declined slightly in the past 12 months, it still hovered at close to 25 per cent in the second quarter of 2019, according to commercial real estate services firm Avison Young.

At the same time, apartment vacancy rates have been declining. Overall vacancy rates in the primary rental market fell from 6.3 per cent in October 2017 to 3.9 per cent in October 2018, according to the Canada Mortgage and Housing Corp. This occurred even with a significant increase in new purpose-built rental apartments coming onto the market.

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