Friday, December 26, 2025
Calgary’s downtown core is experiencing a major shift as of late 2025, turning challenges into opportunities for smart investors and developers. The city has one of Canada’s highest office vacancy rates, sitting at around 27-30%, with millions of square feet of space sitting empty. This surplus stems from factors like the rise of remote work after the pandemic, downturns in the energy sector, and companies downsizing their footprints. But on the flip side, Calgary’s housing market is booming, with demand for urban living spaces outpacing supply. This mismatch has sparked a surge in office-to-residential conversions—repurposing vacant office buildings into apartments, condos, or mixed-use developments.
These conversions are a prime example of urban infill, which means adding new housing and amenities to existing city areas without spreading out into suburbs or green spaces. It’s a win for everyone: It breathes new life into neglected buildings, boosts downtown vibrancy, and creates profitable ventures for those involved. The City of Calgary is fueling this trend with its Downtown Calgary Development Incentive Program, providing up to $75 per square foot in grants (capped at $15 million per project) to make these transformations financially viable. As of November 2025, there are 21 approved projects, repurposing over 2.68 million square feet into 2,655 residential units and some hotel or hostel spaces. A proposed $40 million addition to the program’s budget for 2026 shows the city’s commitment to keeping the momentum going.
For investors, developers, and even homeowners looking to buy in revitalized areas, these conversions offer real profit potential. Acquisition costs for vacant offices are often lower than prime land, incentives offset retrofit expenses, and the end result—modern urban homes—commands higher rents and values in walkable neighborhoods. This article dives deep into the topic, explaining the vacancy backdrop, incentive details, benefits for infill, standout projects, financial advantages, challenges and solutions, and what’s ahead in 2026 and beyond. Written in simple language, it’s designed to help you understand how this trend is reshaping Calgary while unlocking economic opportunities.
Why Calgary’s High Office Vacancy Creates Conversion Opportunities
To grasp why office-to-residential conversions are taking off, it’s important to look at the office market’s struggles. Calgary’s downtown has been hit hard over the past decade. The 2014 oil price crash led to job losses and company mergers in the energy industry, which dominates the local economy. Then, the COVID-19 pandemic accelerated remote and hybrid work models, reducing the need for large office spaces. As of Q3 2025, vacancy rates are reported at 27-30.7%, far above the national average of around 18-20%. This means a lot of buildings, especially older Class B and C properties (mid-tier offices without premium amenities), are underutilized or completely empty.
Sublease space adds to the problem—companies locked into leases are offering their extra areas at discounts, flooding the market. For instance, energy firms have consolidated operations, leaving behind vast floors in high-rises. While some premium Class A spaces are filling up with tech or finance tenants, the overall surplus persists. This creates a buyer’s market for conversions: Investors can snap up these buildings at reduced prices, often 20-40% below peak values.
But vacancy isn’t just a problem—it’s an opportunity. Calgary’s population is growing, with over 110,000 new residents expected between 2023 and 2028. Housing demand is high, especially for affordable and mid-range options in central locations. Converting offices fills this gap quickly, as reusing existing structures is faster and cheaper than building from scratch. The city aims to reduce downtown vacancy to 20% by 2031, and conversions are key to that goal. By removing office space from the market, they help stabilize rates while adding much-needed homes—already, the 21 projects have removed significant inventory, setting the stage for a healthier balance.
This trend isn’t unique to Calgary; cities like New York and Toronto are doing similar things. But Calgary’s program is one of the most aggressive, making it a leader in Canada for adaptive reuse.
The Downtown Calgary Development Incentive Program: Key to Unlocking Projects
The success of conversions hinges on financial support, and Calgary’s Downtown Calgary Development Incentive Program is the engine driving it. Launched in 2021 as part of a broader downtown strategy, the program provides grants specifically for office-to-residential conversions. The main incentive is $75 per square foot of converted space, with a cap of $15 million per project. This helps cover the “viability gap”—extra costs for things like adding kitchens, bathrooms, or residential wiring that aren’t needed in offices.
To date, the city has committed over $200 million, leveraging about $805 million in private investment. That’s a roughly 4:1 ratio of private to public funds, showing how incentives spark market action. In November 2025, nine new projects were announced, adding 972 homes from 947,000 square feet of office space. Overall, the 21 approved projects will deliver 2,655 units, including a mix of market-rate, affordable, and some hotel/hostel rooms.
Eligibility is straightforward: Projects must be in the downtown core, convert at least 50% of space to residential, and meet zoning requirements. Affordable housing components can unlock additional funding, aligning with the city’s goal to address shortages. The program also supports other adaptive reuse, like office-to-hotel, but residential is the focus.
Looking ahead, the proposed 2026 municipal budget includes $40 million more for the program, ensuring it continues beyond current funding. Federal programs, such as the Affordable Housing Fund, provide low-interest loans for projects with affordable units, adding another layer of support. For developers, these incentives reduce risk, making conversions pencil out even in uncertain markets.
Without this program, many buildings would stay vacant. Instead, it’s creating a blueprint for profitable urban renewal.
Benefits of Conversions for Urban Infill and Downtown Revitalization
Urban infill is all about smart growth—adding people and activity to existing areas rather than building new suburbs that strain infrastructure and the environment. Office-to-residential conversions fit this perfectly, offering multiple benefits for Calgary.
First, they boost housing supply quickly. New ground-up builds can take 3-5 years, but conversions often wrap in 18-24 months since the shell is already there. This is crucial in Calgary, where the housing crisis sees vacancy rates for rentals around 4-6%, and affordability is a hot issue. The 2,655 units from current projects include hundreds of affordable homes, helping families and young professionals stay downtown.
Second, conversions revitalize the core. Empty offices create ghost towns after 5 p.m., but residents bring 24/7 life—supporting restaurants, shops, and services. This reduces crime, improves safety, and creates a vibrant, walkable community. Imagine turning a sterile tower into lofts with high ceilings, big windows, and rooftop patios—attractive to millennials and empty-nesters alike.
Third, they’re sustainable. Reusing buildings cuts embodied carbon (emissions from construction) by 50-80% compared to demolition and new builds. Less waste goes to landfills, and retrofits often add energy-efficient features like better insulation or solar panels. In Calgary’s climate, this means resilient homes that handle hail or floods better.
Fourth, for the economy, conversions shift the tax base. Residential properties generate steady revenue, funding city services without new roads or utilities. They also create jobs in construction, design, and management—thousands so far from the program.
From an investor perspective, the benefits shine: Lower land costs (no need to buy raw sites), incentives covering 20-30% of expenses, and premium pricing for unique urban homes. Rents in converted units can be 10-20% higher due to location and character, with quick lease-ups in high-demand areas.
Overall, these projects turn downtown liabilities into assets, fostering inclusive growth.
Spotlight on Key Conversion Projects in Calgary
Calgary’s conversions showcase creativity and scale. As of November 2025, 21 projects are in various stages, with six completed, adding 490 homes and 226 hotel rooms.
Here are highlights from the latest nine announcements:
- Place 800 (800 6th Ave SW): A former office becoming 204 affordable units, funded by city and federal sources. Completion expected fall 2026, focusing on workforce housing.
- TransAlta Building (110 12 Ave SW): Repurposing into 153 market-rate apartments, preserving historic elements while adding modern amenities like gyms and co-working spaces.
- Barclay Centre (606 4 St SW): Transforming into 166 homes, with 27% affordable, set to open in 2027. This project emphasizes family-sized units in the core.
- 510 5th St SW: Bluevale Capital’s 128 rentals, awarded $8.3 million in incentives, highlighting private sector involvement.
- Other New Ones: Include 118 units at 1010 6th Ave SW, 121 at 615 6th Ave SE (with a hostel), and more, totaling 972 new homes from 947,000 sq ft.
Completed successes set the tone:
- Cornerstone (909 5th Ave SW): The program’s first, converting to 112 units in 2023, now fully leased with a mix of studios and one-beds.
- HAT Eau Claire (500 Eau Claire Ave SW): 87 luxury condos, blending office heritage with residential luxury.
- Element Hotel Conversion: Added hotel rooms alongside homes, diversifying uses.
Developers like Astra Group, Peoplefirst Developments, Cidex Group, Crestpoint Real Estate, and Dream Unlimited are key players. Units often feature open layouts, large windows for natural light, and community spaces. Many include ground-floor retail to keep streets active.
These projects prove conversions work, with high occupancy and positive feedback.
Financial Advantages: How Conversions Unlock Investor Profits
The profit potential is what draws investors to conversions. Here’s why they stack up well:
- Acquisition Savings: Vacant offices sell at discounts—often 30-50% below replacement cost. With high vacancy, sellers are motivated.
- Incentive Boost: $75/sq ft covers retrofit extras like residential plumbing (costly in towers). This reduces effective basis by 20-30%.
- Lower Development Costs: Reuse skips site prep, foundations—saving 20-40% vs. new builds. Timelines shorten, cutting holding costs.
- Higher Yields: Residential rents in downtown Calgary average $1,800-2,500/month for one-beds, vs. declining office rates. Values rise with demand; converted units sell at premiums for unique features.
- Tax and Financing Perks: Affordable components unlock federal loans; conversions may qualify for property tax abatements.
Real math: A $10 million acquisition + $15 million retrofit – $10 million incentives = $15 million basis. 150 units at $2,000/month rent = $3.6 million annual income. After expenses, 7-10% cap rates beat office leasing.
Long-term: As vacancy drops and population grows, appreciation adds upside. Risks like construction delays exist, but incentives mitigate.
Challenges in Office-to-Residential Conversions and Solutions
Conversions aren’t without hurdles, but solutions exist.
- Technical Issues: Deep floor plates limit light; fix with atriums or light wells. Plumbing for kitchens/baths adds $100-200/sq ft—plan layouts around cores.
- Regulatory Barriers: Zoning changes streamlined in Calgary, but fire codes require sprinklers, heritage rules preserve facades. Solution: City pre-approvals cut timelines.
- Financing Risks: Lenders see conversions as non-standard; incentives and strong pro formas help secure loans at competitive rates.
- Market and Operational Challenges: Ensuring residential appeal in former offices; add amenities like rooftops. Phasing if building partially occupied.
- Economic Factors: Construction costs up 5-10% yearly; grants offset.
Best practices: Conduct thorough due diligence (structural audits), partner with experienced architects/engineers, include mixed uses for stability.
In Calgary, the program’s success shows challenges are surmountable.
The Future: 2026 Trends and Long-Term Impact
Looking to 2026, conversions will accelerate. The proposed $40 million funding ensures more approvals, potentially adding thousands of units. Trends include:
- Hybrid Models: More mixed-use with retail/office/residential for balanced revenue.
- Affordable Focus: Mandates for 20-30% below-market units to access extra funding.
- Sustainability Upgrades: Energy-efficient retrofits (insulation, solar) for net-zero alignment.
- Taller and Bolder: As codes evolve, taller conversions or additions.
Nationally, Calgary’s model inspires—expect federal tax credits for adaptive reuse. Long-term impact: A vibrant, populated downtown with lower vacancy, higher taxes, and sustainable growth.
Office-to-residential conversions are reshaping Calgary, turning empty spaces into thriving communities while delivering solid profits.
As this trend gains steam, partnering with knowledgeable local builders can make all the difference in navigating these projects. Good Earth Builders, with over 23 years of experience in Calgary and 846 completed projects, specializes in sustainable urban infill developments like multi-family housing. Their commitment to environmental responsibility, including planting 10 trees per job, aligns perfectly with the revitalization efforts. If you’re exploring conversion opportunities, reach out to them for a consultation to see how they can help bring your vision to life.
