Milestone year in office construction

ELIZABETH CHURCH

excerpted from Wednesday's Toronto Globe and Mail, January 3, 2007

Canada's commercial real estate business has rolled into 2007 on the biggest surge in office construction in more than a decade.
Under construction across the country are 71 office towers — close to four times the level of activity just two years ago. Once finished, those buildings will bring tens of millions of square feet of new space to the market, the bulk of it concentrated in downtown Calgary and Toronto.

The biggest transformation of a skyline, by far, is taking place in Calgary, where demand from the energy sector has created the tightest office market on the planet, with vacancy rates for prime space well below 1 per cent. Close to half of all new office construction is taking place in Calgary, although other major centres besides Toronto are seeing activity, including Ottawa, Montreal, Edmonton and Vancouver.In Calgary, Mr. McNair said the risk to new projects is the rising cost of construction and labour shortages. Demand is clearly there for new buildings, but getting them up is the greatest challenge, he added.

Looking ahead, Mr. Hutcheson said he expects the construction activity to continue next year, especially in Calgary where several projects are in the planning stages. Building an office tower can take anywhere from five to six years from conception to completion, he said, and many major projects are gearing up, including EnCana Corp.'s large new head office.