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In many North American cities, downtown office towers still have the look of monuments to a pre-pandemic economy – half-lit, half-used and increasingly out of step with how people live and work.

Calgary, however, is charting a different course. In the heart of its downtown core, a bold office-to-residential conversion program is turning vacant floors into vibrant homes.

At the centre of this shift is a simple reality: Calgary has space, and it has people who need homes.

Years of oil and gas consolidations left millions of square feet of office space underused, while steady population growth continues to fuel housing demand. Rather than waiting for the office market to rebound, the City of Calgary decided to intervene – strategically and aggressively.

The result is the Downtown Calgary Development Incentive Program, an initiative that offers developers grants of up to $75 per square foot to convert underused office space into residential units, hotels, retail and cultural uses.

Because so many headquarters were concentrated downtown, and companies shedding tens of thousands of jobs, Calgary was left with one of the most overbuilt office markets in North America, explains Alecia Peters, manager of business strategy and analytics for the City of Calgary.

“What that required was some creative thinking, in terms of, ‘How do we address this problem?’ and really it boils down to one denominator. You have to reduce the amount of office space.” 

But doing that at scale required more than zoning tweaks or hopeful market signals. It required meaningful financial incentives, a streamlined policy environment and a long-term vision for downtown as a place to live, not just work.

Since launching in 2021, the program has approved 21 projects, with six already completed and several more nearing the finish line. In total, 2.6 million square feet of empty office space is being transformed into more than 2,600 new homes, alongside hotel rooms and street-level amenities.

Office-to-residential conversions are notoriously complex. Existing floorplates, aging mechanical systems, and the need to upgrade HVAC and life-safety infrastructure all add cost and risk. The incentive program is designed to bridge that gap.

The city has also created a friendly policy environment for things like building permits, says Peters, and conversions can be delivered in 12 to 18 months.

“When we think about strategic investments, we’re not thinking about the conversion program in a silo,” she says. “We’re thinking about downtown that’s the cultural and economic heart of the city. We’re investing in infrastructure, we’re investing in safety, we’re investing in public amenities to enhance the value of Calgary. That creates opportunity.”

Developers apply by submitting detailed project proposals, which are then put through a rigorous due diligence process.

“We review the merits of the project itself,” says Peters. “We’re able to ensure that it aligns with the criteria of the program and essentially we are then able to award a grant if it meets the criteria.”

If approved, grants are paid out after project completion. Developers must also commit to maintaining the new use for at least 15 years.

Conversions in Calgary can often be delivered in 12 to 18 months, far faster than ground-up residential construction. That time savings, combined with grant funding, has proven compelling – especially for out-of-town investors.

Increasingly, investor interest is coming from Toronto. Toronto-based Institutional Mortgage Capital recently completed The Loft, converting 55,000 square feet of office space into 56 residential suites. Meanwhile, Dream Office REIT is in the midst of a much larger transformation, converting 135,000 square feet into 166 new homes, with completion slated for late 2027.

Global design firm Gensler, which advises on multiple Calgary projects, has gone so far as to call the program “the best in North America,” citing its blend of financial incentives, reduced red tape and proactive city staff support. By some estimates, 15 per cent of the city’s office inventory is already in some stage of conversion – far more than any other major city on the continent.

The conversions are a good fit with a new event centre and arena under development, as well as other projects like the Element Calgary Downtown hotel and its rooftop restaurant, Bow & Bend.

The University of Calgary’s School of Architecture, Planning and Landscape has also taken over eight floors of a downtown building, bringing 1,200 students into the core.

Calgary still has an estimated 12 million square feet of office space to contend with, and energy-sector consolidation continues. But the city believes it is “holding the line” on vacancy, stabilizing property values and even increasing the value of Class B and C office buildings.

Peters says Calgary has one of the most convertible markets in North America because of the age and floorplates of the buildings.

“We have an amazing building inventory that creates opportunities for additional conversions.”

The program is also stimulating broader investment, with buildings being acquired and repositioned outside the incentive framework altogether.

The economic ripple effects are significant – more than $1.7 billion in estimated impact city-wide. And with additional funding under consideration, Calgary expects to soon open another intake for conversion projects.