With office vacancy rates in Calgary still at near-peak levels, companies are converting entire office towers into residential buildings to appeal to a different type of tenant.
Ken Toews is vice-president of development with Strategic Group, which is currently redeveloping four office buildings in Alberta for residential use and has plans for two more.
Included are the Barron, an 11-storey Art Deco tower along Calgary’s Stephen Avenue that will have 93 residential rental suites along with office and retail space, and Cube, a seven-storey building in the Beltline being converted into 65 rental suites.
Toews says Strategic Group is very entrepreneurial, so given the weak market for office space rentals, it sought a different use for some of its buildings.
“Where the building is the right size and in the right location, we have been converting from office to residential,” he said.
He says conversions are still quite rare in Canada, but they have been more common in places like Chicago, which he toured while planning the company’s Alberta projects.
“There’s a whole bunch of things that you have to do right to make them work,” he said.
Strategic Group’s conversions will include things like rooftop amenity spaces, ground-floor retail and even an entire new residential building to accompany the office building being converted.
“We’re not really a cookie-cutter-type company,” said Toews. “We adapt our projects to the neighbourhood and the people who are going to be tenants.”
Bruce McKenzie – vice-president of business development at the Calgary office of architectural, engineering and planning company NORR – says when B Class office buildings could be bought for less than the cost of new construction, “a lot of clients were coming to us and saying, ‘what could I do with this (building)? I could buy it so cheap.’ ”
McKenzie says they worked on more than 20 projects, but converting a building designed for office use into residential has many challenges.
He says the typical “floor plate” of an office building is much larger and deeper than a residential building, making it difficult to design suites with natural lighting from outside windows.
Many B Class office buildings were built using post-tension construction, so drilling into the floor slabs to install plumbing needed for numerous suites is dangerous and costly.
Former office buildings might also lack sufficient parking for residents, or their older mechanical systems might need to be completely replaced.
McKenzie says many companies contemplating an office to residential conversion eventually decided to walk away from a prospective purchase due to the challenges.
Still, companies are finding the right combination of factors to go ahead with certain projects.
Toews says the first residents are expected to move into Cube by March 2019 and the Barron in 2020, bringing new residents into the downtown core.
“We’re big believers in Calgary’s downtown,” he said. “The great thing about converting office buildings into residential is actually getting more people living in downtown. The whole vibrancy of downtown is really important.”