CALGARY — 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.
Olshevsky said he has managed economic uncertainty with a simple solution: finish fast.
“Once we got a groove on things, that became a little easier,” he said of his company’s first conversion, completed last year. He expects its second to finish in early fall.
Some developers haven't been so lucky. The group revamping the nearly 75-year-old Barron Building, one of the first towers that housed Calgary's oil industry in the 1950s, have seen costs double as they discovered major structural issues.
More broadly, office space in downtown hasn’t rebounded with the energy sector.
Recent merger and acquisition activity has partly hampered occupancy, the CBRE report says. New entrants have been few, and it comes as the city’s biggest tenants rightsize offices to meet their needs.
“There was very strong momentum for people getting back to work in the office, but momentum has slowed down a bit … (it’s) too early to tell if it’s a trend or just a minor blip,” CBRE's Kwong said.
Proponents of conversions prefer to view the effort more holistically.
Mary Rowe calls Calgary a “prophetic city,” because its downturn in the core started years before the pandemic. That forced it to find solutions before other cities were dealt a similar hand, said the president and CEO of the Canadian Urban Institute.
“It doesn’t surprise me that it’s taken longer, because not every building is easy – none of it is easy,” she said. “We need a permissive environment so that you can try some stuff, and that’s what Calgary has been doing.”
Other financial hubs, such as Lower Manhattan in New York, have been forced to take a similar approach to gluts of empty offices. Officials there turned to conversions after a recession in the early 1990s that gutted corporate spaces around Wall Street.
“Whenever Wall Street caught a cold, Lower Manhattan got pneumonia,” said Andrew Breslau from the Alliance for Downtown New York.
The city then brought forward legislation making it easier for developers to convert offices into residential spaces. That effort accelerated after the Sept. 11, 2001 terrorist attacks wiped out swaths of office space.
Over the past 30 years, Lower Manhattan’s residential population has grown to 70,000 from 14,000, Breslau said. The success of conversions over that time has been “an urban planner’s dream,” he added, with families and strollers now common among the expanse of suits and ties.
Conversions only take a small fraction of empty space off the market, but they kick-start new activity, said both Breslau and Rowe.
“How do you put a price on a park? A park has one physical price, but when you look at the benefits, they’re much more broad than that,” Rowe said. “And I would say the same is true for conversions.”
Increased property values – and higher revenues for city coffers – come with redevelopments. Had Calgary done nothing, Mahler said, its downtown would continue to languish.
“You would not see people wanting to live downtown. It would put a negative mood in the business environment.”
Calgary’s program also offers carrots for demolishing old buildings and for higher education institutions willing to convert empty office space.
While no schools have taken up the city on its offer, Mahler said an announcement with at least one post-secondary institution is coming this spring.
This report by The Canadian Press was first published March 30, 2025.
Matthew Scace, The Canadian Press
