On Wednesday, the City of Calgary announced the creation of a new Downtown Office Demolition Incentive Program to assist property owners with the removal of office buildings that are deemed to be at the end of their lifespan and unsuitable for conversion.
The Demolition Program will provide financial incentives in the form of a $15 per sq. ft grant, based on the existing gross office floor area set to be demolished, with an additional $5 per sq. ft potentially available for projects that require asbestos abatement or hazardous material removal.
The total grant will not exceed 50% of the total demolition costs, and the maximum grant is $3M per property, unless Council approves a greater amount for a project.
As is the case with the new Downtown Post-Secondary Institution Incentive Program that the City of Calgary also announced on Wednesday, the Downtown Strategy Team will conduct an initial evaluation of applications before forwarding a recommendation to the Incentives Approval Committee. If the application is seeking a grant over $3M, it will instead go to Council for a decision.
The Demolition Program will focus on the same area as the Post-Secondary Institution Program: the downtown core bound by 9th Street SW, 3rd Street SE, and 2nd Avenue SW, north of the CPR Main Line. Buildings outside that downtown core but within the Greater Downtown Plan Area will still be eligible and considered, but the downtown core area will be given priority.
The Downtown Office Demolition Incentive Program focus area. (City of Calgary)
The Demolition Program provides contributions towards demolition costs, but the City says the overall goal of the program is to "increase overall economic activity, vibrancy, and safety in the Greater Downtown Plan Area," according to the Program's Terms of Reference. The City hopes to achieve this by:
- Removing office space from the Greater Downtown Plan Area -- with a priority area of the Downtown Core;
- Establishing new public amenity spaces to support the growing downtown resident population and enhance vibrancy;
- Supporting redevelopment of under-utilized properties and increasing the mix of uses; and
- Reducing the downtown office vacancy rate and supporting property values and the non-residential property tax assessment base.
The City hopes the Demolition Program will expedite the removal of 200,000 sq. ft of vacant office space in Downtown Calgary, without requiring a new budget since the funds will be redirected from the City's existing Plus 15 Fund Offset Incentive Budget.
The new Downtown Office Demolition Incentive Program, as well as the Post-Secondary Institution Incentive Program, are offshoots of the City's Downtown Development Incentive Program, which was created to encourage the conversions -- or "adaptive reuse" of vacant office space into housing.
Calgary accumulated over 4M sq. ft of office space between 2013 and 2018, according to a November 2022 economic report, which was then followed by a steep demand reduction of over 6M sq. ft, stranding the City -- and particularly the downtown area -- with numerous vacant office buildings.
A Planning and Development Report presented to council on Tuesday noted that the City's goal is to remove 6M sq. ft of office space from Downtown Calgary by 2031. To date, the City says that 14 office-to-residential conversions are under consideration as part of the program, and that if all 14 are approved, they will remove over 2M sq. ft of vacant office space and create over 2,000 units of housing.
On Tuesday, Council also approved improvements to the existing Downtown Development Incentive Program, raising the Incentives Approval Commitee's approval threshold from $10M to $15M to allow for speedier approvals and larger conversion projects. Only applications seeking over $15M now, rather than $10M, will need to be approved by Council.
"Creating new public amenity space through demolition of empty buildings supports the initial intent of the program," said Natalie Marchut, Manager of Development and Strategy for the Downtown Strategy Team, "making downtown more livable, vibrant, and more attractive for both residents and visitors."