How does the oil and gas sector's cyclical nature affect commercial real estate in Calgary specifically?
Correct Answer
B) Oil price downturns can lead to significant office vacancy increases, sublease space flooding the market, and reduced demand for industrial and retail space
Calgary, as the headquarters for most of Canada's oil and gas companies, is particularly sensitive to oil price cycles. During downturns, companies downsize or close, leading to increased office vacancy, large amounts of sublease space entering the market, and reduced demand for supporting industrial and retail properties. The 2014-2016 oil price decline resulted in Calgary office vacancy exceeding 25%.
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