Editor's Note: This is a guest blog by Everyday Tourist reader Chris Provencher in response to the announcement that Calgary’s downtown office vacancy rates have increased to 20% - near record level. I have often stated Calgary's downtown is an office ghetto from an urban design perspective, now it could literally be the case.
This Could Get Ugly
I am quite concerned about the economic environment in Calgary, and Alberta/Western Canada, not only today, but also for the foreseeable future. The current geo political and commodity pricing environment reminds me of what Alberta experienced with the National Energy Prices and low energy pricing back in the 80s. It is further complicated with influence of global political uncertainty in play.
Yes, the energy price will improve. However, Canada is at a disadvantage because we do not get world pricing for our oil and gas products due to a lack of pipeline access to sea for export internationally. The United States may be our largest customer, but it is now a serious competitor and is taking our ideas, technology and talent to gain a presence in the global marketplace.
Money is exiting Alberta & Calgary
What we are also seeing are individuals and companies moving their investment monies to plays in other countries. Our local, provincial and federal governments are not reacting to this significant shift. Tax revenues from the energy sector are not going to recover for at least a decade; governments (local, provincial and federal) can’t continue to spend like this is a temporary situation.
It will take years for this capital investment to return to Calgary, Alberta and Canada. I believe foreign investors and companies with a long-term investment viewpoint will acquire Calgary/Canadian assets at low prices and wait for the business environment to improve in the energy marketplace.
Retail/Real Estate Crash
In recent trips to shopping areas in the downtown, Beltline and Kensington, I found it scary. A lot of empty retail space, few shoppers and empty parking lots. People are not spending money and it will only get worse.
The real estate situation in Canada, especially Vancouver and Toronto, really concerns me. Having seen real estate busts before, all the signs are there for a significant decline in house prices.
Talking to investors, money managers and mortgage brokers in Calgary, nobody wants to rent or give mortgages to clients who are a high risk because they might lose their job in the near future.
Change of Attitude by NDP
With all this said, we need to foster a more positive attitude again in Calgary. I do not think the NDP government giving small business a tax reduction and then hiking their expenses with a Carbon Tax is the right approach.
There is no doubt in my mind that we will see further tax increases from the Provincial NDP and Federal Liberals, with no serious/real attention given to reducing or better managing expenses in government dealing in health care and education.
The federal Government is doing nothing to help Alberta. Justin Trudeau should look again at what damage resulted from his father’s business actions i.e. the National Energy Policy.
In your blog “Let’s not panic. Yet!” you talk about how Montreal has reinvented itself since its crash in the ‘70s and ‘80s. I remember what Montreal used to be like, being born there and later having major corporate clients there. When the companies and individuals left, Montreal never got back to its previous business and social/ culturally attractive environment.
When we lived in Toronto in early 90s, it was unbelievable the number of Montreal professionals and business leaders who had recently moved there. This is a direction I hope does not occur in Calgary, but it we;; could if something is not done to correct it quickly.
Calgary and Alberta may become an unattractive place to work for many Calgarians today.
The grass is definitely looking greener elsewhere.
I hope I am wrong, but this could get ugly and it could be ugly for a decade or more. And it won’t just be Calgary that suffers; Canada will soon follow as the entire country has been living off of the energy sector tax revenues for the last 30 years and there is nothing on the horizon to replace it.
Maybe we shouldn’t panic, but public and politicians need to get their respective heads out of the sand. The public needs to lower its expectation on the quality of living we can afford. Politicians need to realize that they HAVE to cut spending and SUPPORT business investment.
Chris Provencher is a recently retired sales/marketing professional from a major International accounting firm and a long time Calgary resident.