Houston Company Strategies Major Redevelopment for First Tower in Oilpatch, in Face of Half-Full Structure and Rising Office Job Rate
Calgary’s hard luck office market isn’t scaring off an international realty company, which stated Wednesday it obtained the 27-storey Very first Tower despite the fact that it is only 51 percent rented.
Houston-based Hines, in addition to a subsidiary of real estate funds managed by Oaktree Capital Management out of Los Angeles, purchased the 708,354-square-foot high-rise in the downtown east submarket of Calgary, and is planning a major redevelopment at the structure home to Encana, Telus and TransCanada.
A report this week from CoStar Research kept in mind the overall office market vacancy rate in Calgary fell 30 basis points in first quarter of 2018 from completion of 2017, but is still up 70 basis points year over to 15.3 percent. That rate is anticipated to climb in 2018 with the delivery of Telus Sky, a 761,235-square-foot, mixed-use tower presently under construction at 7 Ave. SW and Centre St. in Calgary’s main core, in 2018. The downtown job rate is more than 21 percent.
Increases in the vacancy rate from a year ago are being driven by new supply and that lots of tenants that pre-leased area are now putting the area they no longer require on the sublet market, according to CoStar Research study. Net asking rental rates fell 1.1 percent in the first quarter from the end of 2017 and 2.2 percent from a year ago to $16.92 per square foot.
In the face of those numbers, Hines and partner Oaktree are pushing ahead with a significant upgrade to the home at 411 1st St., part of the +15- connected office complex network that connects the city’s core through confined pathways. The group is guaranteeing a “extensive redevelopment” of the 34,000-square-foot +15- level – something it feels will drive renters to the structure.
No price was divulged on the deal or just how much will be spent on redevelopment.
” As a company, our company believe in, and are committed to, the city of Calgary with First Tower being Hines’ 2nd workplace acquisition during the recent energy recession,” stated Syl Apps, Hines handling director, in a declaration.
New area being updated will consist of a tenant lounge/collaboration location; a café and food service location with the possibility for a differentiated food hall concept; an outside balcony; a physical fitness and health centre and a modern, versatile conference facility.
For more information on the transaction, please see CoStar Compensation # 4208236.