'A great idea': How office conversions could resurrect Calgary's ailing downtown

Four years ago, Maxim Olshevsky abandoned his business for a new opportunity.

After years of observing an exodus of downtown workers, Calgary announced it would be offering handsome payouts to developers to turn abandoned office towers into apartments.

"We completely pivoted in 2021," said Olshevsky, owner of Peoplefirst Developments. Until then, his company specialized in revamping rundown buildings into mixed-used developments.

"It was a really good choice for our company."

The city and developers are now declaring the program a victory.

The city's website says 11 developments have been approved, but only two have crossed the finish line to date. Six more are to be completed this year.

Should all the projects successfully conclude, with more under review, the city would have paid more than $200 million to help developers get through the burdensome and expensive process of retrofitting offices into living spaces.

"It's gone way beyond what we actually thought would happen," said Thom Mahler, the city's director of downtown strategy.

There is debate over whether conversions will cure Calgary's ailing downtown, considered one of Canada's most vacant cores. The energy hub was devastated by plunging oil prices in the mid-2010s and again by the COVID-19 pandemic. It has struggled to recover.

About 30 per cent of Calgary office space sits vacant, says commercial real estate company CBRE. At its worst, more than a third of downtown office space was unused. While helpful, CBRE says a successful office conversion program won't solve the problem.

It says in a recent report that vacancies in downtown Calgary would only be a percentage point higher if the program didn't exist. Greg Kwong, CBRE's executive chair for Alberta, says it's too early to judge the project.

"If you gauge ... the success of the program today, no, it hasn't been good. But it's still ongoing," said Kwong.

"It's still a great idea."

Projects have faced higher material costs in recent years, and expected tariffs on Canadian goods entering the U.S. would likely further drive up costs. Kwong has said Calgary's offering of $75 per square foot would need to double to meet developers' needs.