Calgary in the spotlight

The subject of Calgary, and specifically its downtown core, emptied by a collapsing energy industry, came up on HN last week. Being from there, this was of course interesting.

The general thesis is that Calgary’s downtown vacancy rate is by far the highest in Canada – at 29% compared to 17% for Edmonton which is number two. Sporting a massive commuting class, downtown has always infamously dead by 5 PM for decades, but incredibly, it’s gotten even worse.

One surprising thing is how many Calgary or ex-Calgary HNers there are who chimed in on the subject. For those who left, anecdotes there largely match my own – headed for the sunnier shores of Vancouver, Toronto, or down to the US. For those who stayed, the story was often the same – unlike Vancouver and Toronto (where they lived for a stint), you can actually afford to live well.

The elephant in the room is that Alberta should have engaged in better long term planning to foster strong non-energy sectors that could pay the bills during an inevitable future slump. HNers (and many others) blame the government for this, but they were only one part of the problem. Calgary during the 00s reminds me a lot of San Francisco a few years ago – people may complain about rising prices, but each individual actor was more than happy to capture as much of that wealth as they possibly could with little regard for the future. Standing government policy around taxation and spending in both cities was to plan for a future where things would be at least as good as they are today, and probably much better, and that’s how people behaved as well. Very, very few made the argument for diversification, and even fewer did anything substantial to engage with that project. Even if the government was at fault, it was a government that very thoroughly represented the attitudes of its constituents.

There are possible opportunities here. With the Fed continuing to inflate assets into the stratosphere, prices in major work hubs are going to continue their steady march upwards, and more people are going to be looking for alternatives – not because they want to necessarily, but because they have to. Places like Calgary, which have good metropolitan bones, but more importantly, where it’s affordable to live comfortably, are going to stand out by virtue of that characteristic alone.

Oil prices are back at the highest we’ve seen them in a long time. Maybe that means the energy industry in Calgary comes back, and maybe it doesn’t – many of the majors have already left town, or can run leaner than they ever could before. Calgary shouldn’t assume that it will, and should be laser focused on (1) incentivizing non-energy companies and startups into the city as a good place to work and live, and (2) incentivizing build out of the type of cultural institutions (restaurants, bars, events, breweries, etc.) that make it an attractive target for a young working force.

Given health care, compatible time zones, a working immigration system, and good general quality of life, I’ve always been surprised that Canada hasn’t been able to make better inroads into tech. The industry’s taken a good liking to Vancouver in more recent years, but that area’s on a collision course to be Bay Area v2.0 in terms of affordability and social issues, if it isn’t there already.

Our political systems don’t incentivize any thinking longer term than what we’re having for lunch, and currently don’t allow for consideration of any matter that’s not Covid, so I’m not optimistic, but hopefully the city can find a way back to its feet.

Calgary in the spotlight

October 17, 2021

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