Public dollars are quietly reshaping Calgary’s office market, as demand from government agencies, health care providers and education groups fills space left vacant by the private sector. 

New provincial funding for $10-per-day child care, expanded health services and a surge in charter and post-secondary schools have driven a wave of leasing, particularly in smaller downtown and suburban offices. The trend is expected to continue with the Alberta government’s recent mandate requiring public service workers to return to the office.

“What we have seen over the last year-and-a-half that’s been driving occupancy is some engineering come out that’s not focused on energy. Civil engineering. Electrical. But they’re not really energy focused, which is interesting,” said Brittany Block, vice-president, Colliers, during a panel discussion on the office market at the recent Calgary Real Estate Forum.

“But a lot of it is being driven by public funds so whether it’s the actual Crown uses like government, Government of Alberta or federal government, or you’ve got AHS (Alberta Health Services), we’re seeing a lot of health care, we’re seeing child care.”

The education sector is also seeing increased activity.

“We’ve seen a huge uptick from charter schools, private schools and a lot of post-secondary career colleges. I think that’s been really driven by the massive immigration that has come to our city over the last couple of years,” Block added.

Province mandates return to office

In late October, the Alberta Public Service announced all employees must return to the office full-time starting Feb. 1, 2026.

According to Colliers’ Q3 downtown office market report, Calgary’s market experienced about 26,000 square feet of positive net absorption. Vacancy has fallen 70 bps year-over-year to 27.5 per cent, primarily driven by class-A demand, which accounted for nearly 58,000 square feet of positive net absorption. 

“Merger and acquisition activity in the energy sector will introduce near-term vacancy, but it is expected to be partially offset by growth in other sectors,” the report states. “Merger and acquisition activity in the energy sector continues to reshape office demand, as consolidations generally result in smaller, more efficient office footprints.... Additionally, recently proposed and pending transactions are expected to bring additional space to the market in the coming quarters.”

In its Q3 Suburban and Beltline report, Colliers said the office market saw just over 210,000 square feet of combined positive net absorption in the quarter, with relatively balanced leasing activity across all submarkets. Overall vacancy continued its decline, falling 371 bps year-over-year to 16.58 per cent, the lowest level recorded since Q4 2015.

Energy sector continues pullback

Besides the M&A activity impacting the office market, the energy sector has been experiencing layoffs. Recently, Imperial Oil announced a 20 per cent workforce reduction by the end of 2027, representing about 900 jobs, mostly in Calgary. After that, it announced a deal with an unnamed buyer to sell its sprawling suburban Calgary corporate campus of about 800,000 square feet.

According to the City of Calgary, the property’s assessed value is $150 million.

Also, recent media reports indicate ConocoPhillips will lay off an unspecified number of Canadian employees.

In an interview, David Lees, executive vice-president, office leasing and sales, Cushman & Wakefield, who moderated an office panel discussion at the Forum, said the energy sector news will impact the city's office market.

“There's a number of headwinds that Calgary is facing, specifically the downtown market. You've got the mergers and acquisitions activity.... In 2015 the sector was kind of forced to drive efficiency. It was a time where depressed oil prices meant you have to figure out a way to do more with less,” he said. 

“We saw that trend continue well over the past decade, and now we're in a position where not only are we still dealing with the efficiency, and the smaller footprints of these companies, but also just general challenges for the energy sector, which are resulting in a number of these groups... hanging up their operations in Canada. So I think we'll continue to see further negative absorption resulting from this activity, but certainly it's one we've been dealing with for a long time already.”

Government fills some of the void

Lees said the market has seen a lot of activity from all three layers of government.

“To speak to the province, specifically, they're constantly active looking for office space in the city. Whether or not that is the result of their return to office mandate remains to be seen,” he explained. “It could be consolidations of various locations. But in a perfect world, this is the result of the return to work, leaving them short of space at this point.

"Another big player in this space is the charter schools. Not directly the government, but certainly the public sector that is driving a lot of absorption in our space. They are big utilizers of space, and we're seeing a number of new schools out in the market opening up new locations, and it certainly is helping on the office side.”

During the forum panel discussion, Ryan Handley, vice-president, office leasing, Brookfield Properties, said the energy sector remains the largest occupier of space in the market but technological advancements and efficiencies are impacting the workforce.

“The energy sector really hasn’t changed all that much. We’ve been in a 10-year trough and those companies have gone through enormous changes. They became more efficient, cost-conscious. Their production methods have been refined. We are the best in the world in what we do, but they’ve really streamlined their operations and as a result of that they’re pretty status quo today,” he said.

“As these companies go through the ebb and flow of the cycle that particular market dynamic is going to lead to more M&A and until we have more positive discussions and regulatory changes within Canada and investment coming back, it’s going to translate.”

Gabby Lacombe, director, leasing, Aspen Properties, said while Calgary has grown as a technology hub many of those companies have remote working arrangements and that's not anticipated to change: “We don’t see that translated into office occupancy." 

Ryan Sirski, vice-president, office leasing and operations, Oxford Properties Group, said there’s healthy demand for quality space.

“I’m very optimistic about this market. From a real estate perspective, we’re going to see continued strength, growth and confidence especially in the A and the AA markets,” he said.