“It’s A Bloodbath” – Here Is The Biggest Casualty Of Canada’s Recession
In the past year, we have extensively profiled the collapse of ground zero of Canada’s oil industry, Calgary, as a result of the plunge in the price of oil, in posts such as the following:
- “Canada Crude Contagion: Calgary Home Prices Drop Most In 2 Years”
- “Canada’s Biggest Oil Casualty To Date: Calgary’s Nexen Shutters Oil Trading Desk”
- “The Canadian Housing Bubble Has Begun To Burst”
- “Canada’s Oil Patch Confidence Crashes”
- “Canada Mauled by Oil Bust, Job Losses Pile Up – Housing Bubble, Banks at Risk”
- “The Stage Is Set For A Massive Housing Market Correction in Canada’s Oilpatch”
Since then it has only gotten worse for Canada, and as of two it culminated with the first official recession in 7 years.
Additionally, in September we profiled the expected collapse of the Calgary commercial real estate market when we reported that in Alberta Canada now has 1.7 million square feet of empty office space, the most in North America, with another 5.2 million under construction! After years of booming construction, the natural resource rich country is starting to feel the pinch.
Overnight Bloomberg followed up on this stunning deterioration when it, too, reported that “office-tower owners in Canada’s energy hub are about to feel the full force of the oil-price crash.”
Using data from real estate brokers including Jones Lang LaSalle Inc. and Avison Young, Bloomberg calculates that vacancy is already at a five-year high in Calgary and rents are the lowest since 2006 after thousands of office jobs were cut. Energy company tenants have now begun to ask for rental relief and are offering subleases for as little as half the going rate.
The backlog is even worse: five new office towers with about 3.8 million square feet (353,031 square meters) of space hits the market in the next three years.
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