Residential conversions pays off for Calgary office owner
September 15, 2023
The August 2023 sale of a downtown Calgary mixed-use tower is showing the benefits of converting office space to housing units.
Westview Heights, a 343-unit apartment tower in downtown Calgary sold for $83.4 million, or $243,149 per unit. This works out to a blended price of $370 per square foot, compared to the current range of $50 to $100 per square foot for straight office space.
“You’d probably get very little value for the commercial space,” said Samuel Dean, senior vice-president, capital markets, JLL Canada.
The low value for commercial space reflects the glut that currently exists in the Calgary market, which CBRE Ltd. reported being 31.5 per cent in the second quarter of 2023—the highest downtown office vacancy rate in Canada.
Calgary launched its Downtown Development Incentive Program in 2021 with the aim of removing six million square feet of office space from the market by 2031.
The former owner of Westview Heights bought the property in September 2007 and recognized the value residential space could add. A total of five floors of offices were converted to create an additional 55 residential units.
This means the residential conversion added more than $13 million to the value of the property, according to JLL estimates, on top of the natural increase in value since acquisition.