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A Frontrunner in Booming Calgary Livingston Place Leads Surge of New Development
March, 2007
By Barbara Carss
Phased development is a somewhat exaggerated description of the twin towers of Livingston Place, now nearing completion in downtown Calgary. The groundbreaking for the matching 21-storey granite and glass structures occurred mere months apart. Tenants are set to move into Phase 1 this May and will begin occupying Phase 2 in August.
However, the developers initially had different expectations about project timing, following a long wait for the market conditions that would make speculative construction viable. Development approval for the site at 2nd Street and 3rd Avenue SW was first obtained in the early 1990s, but it remained a surface parking lot for another 10 years.
"We announced the first building in December of 2004 and, in the office market at that time, the vacancy rates were probably in the 8 to 10% range. In Calgary, the office market tracks the oil and gas market pretty closely so we decided there would be a need for new space and the timing was right," recalls Randy Magnussen, Senior Vice President for Western Canada with Bentall Real Estate Services. "Our original thought was that the second tower probably would not happen that quickly."
In reality, the entire 840,000-square-foot complex was fully leased by mid-2006. Scheduling was accelerated when the first tower was 75% leased within nine months. Plans for the second tower were announced in September 2005 and a major tenant, which will occupy eight floors of the building, signed on soon after.
Livingston Place is one of the earliest and the largest complex thus far in Calgary's most recent cycle of downtown development. Three other office buildings are also slated for completion in 2007, four more will follow in 2008 and 2009, and at least three more have development approval and are in the pre-leasing stage.
"The last time there was anything close to this kind of scenario was in the early 1980s," Magnussen observes. "But this time, the development is taking place in a more controlled fashion. It's on sites that were controlled primarily by pension funds."
Nevertheless, developers and their contractors are facing the challenges of competing for labour, meeting timelines and budgets in an economy rife with price increases and supply chain interruptions. "With Livingston Place being the first project, the contractor, Ellis Don, had the advantage of starting the project before the onslaught of all the downtown towers, but it did eventually get caught up in that," says Wade Gibbs, the architect, and a Partner with Calgary-based Gibbs Gage Architects. "We've got issues with everything - shortages of labour, materials and suppliers."
PRESSURE FOR DOWNTOWN PRESENCE
Most of the buildings now under construction are already fully leased, and the spaces those leasers are vacating have also been spoken for. Net rents for AA space are now hitting the $50-per-square-foot range, while the vacancy rate downtown currently sits at virtually 0%. As of December 31, 2006, Colliers International reported 970 square feet of Class A space, about 43,000 square feet of Class B space, and about 60,000 square feet of Class C space available. There was no Class AA space for lease downtown. (See associated story, page ?)
Industry analysts don't foresee any loosening in the market in the short term. "There will be just under two million square feet of space new to the market in the next year, but no impact on vacancy," says Glenn Simpson, a Partner with Avison Young Commercial Real Estate in Calgary.
This dramatic pressure on a market where the newest existing office building dates back to 2001 arises from the booming oil and gas sector and its historical preference for a presence downtown. "Calgary is funny that way in comparison to a city like Toronto," Simpson muses. "If they are two or three blocks outside the core, people [in Calgary] think they are miles away."
Accordingly, Provident Energy and Pengrowth Energy will be prominent tenants at Livingston Place. The Plus 15 elevated pedestrian walkway network will further reinforce the professional synergy that energy companies are seeking with a direct connection to the 31-storey BP Centre on the neighbouring block at 4th Avenue SW, and a planned link to another 38-storey, 880,000-square-foot tower that Bentall and British Columbia Investment Management Corporation (bcIMC) have just begun building on 4th Avenue SW.
1990s DESIGN GENESIS A DISTINGUISHING FACTOR
Architecturally, Livingston Place was devised to complement BP Centre, which is also owned by Bentall and bcIMC. The new towers share their forecourt with the Chinese Cultural Centre - an arrangement that contributes to the largest amount of green/open space associated with any office development in downtown Calgary.
"When the concept was done 10 years ago, we considered taking the [allowable] 900,000 square feet and building one tower, but that wasn't going to be phased easily," Gibbs recounts. "We focused more on trying to fit into the complex and taking our cues from BP Centre. We made the towers identical and placed them at 90-degree angles as a matched set. They sit well in the landscape. The bronze coloured glass and brown granite give them kind of a jewel-like quality."
A predominantly glass lobby ties the space to its surroundings. "When you walk into the building, you will see right through to the park and plaza," Gibbs adds. "What makes it [denote] Calgary is the open space and the urban design response to its setting."
Sightlines from the buildings offer views to the nearby Bow River valley, while the surrounding Eau Claire neighbourhood is known for restaurants, shopping and burgeoning condominium development that is drawing more downtown dwellers. In-house amenities include the Livingston Club, which encompasses a conference centre, fitness centre and lounge for the towers' tenants.
Other design aspects hearken back to the 1990s era when the City of Calgary granted approval for the project. Notably, Livingston Place boasts 500 underground parking spaces, representing a space-per-square-foot ratio almost double what the City's downtown parking standards now allow.
Similarly, the complex was conceived long before the relatively recent emergence of the LEED (Leadership in Energy and Environmental Design) program so it won't be eligible for the certification that the developers have pledged to achieve in their nearby project underway on 4th Avenue. However, Gibbs stresses that Livingston Place will be largely comparable with other LEED buildings. "We've always designed with sustainable ideas in mind and good quality energy management, but the design for Livingston Place predated the whole LEED emphasis," he notes.
PRUDENCE WITH STYLE
The increasing adoption of green design principles to gain long-term operational savings illustrates still more differences between Calgary's current office construction boom and that of 25 years ago. "Most of these buildings are being built as portfolio buildings, as opposed to just flipping them," Gibbs says.
"There was a lot of overbuilding in the '80s, but that's not happening this time," Magnussen concurs. "In five years, the vacancy rates will still be under 10% unless something catastrophic happens."
That could also bode well for the City of Calgary's ambitions for design excellence and great streets - articulated in the draft version of the Centre City Plan, which was released for public consultation in October 2006.
"The design direction in the new towers in downtown Calgary are much more courageous and design oriented than anything that was built in previous eras even though the vacancy rates are the lowest they've ever been," Gibbs maintains. "Full marks to the developers. They could be putting up boxes, but they are looking for quality. They are paying a lot of attention to design."
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