Oil-price crash brings towering woes in Canada

Toronto

OFFICE-TOWER owners in Canada's energy hub are about to feel the full force of the oil-price crash.

Vacancy is already at a five-year high in Calgary and rents are the lowest since 2006 after thousands of office jobs were cut. Energy company tenants have now begun to ask for rental relief and are offering subleases for as little as half the going rate, according to real estate brokers including Jones Lang LaSalle Inc and Avison Young Canada Inc.

That's before five new office towers with about 3.8 million square feet (353,031 square metres) of space hits the market in the next three years.

"It is a bloodbath," said Alexi Olcheski, an office-leasing principal at Avison Young from his office in downtown Calgary. "We're at the highest point of fear and uncertainty now." Caught in the downturn are tower owners including Dream Office Reit, Artis Reit and Morguard Corp, whose shares have dropped about 27 per cent, 14 per cent and 5.1 per cent respectively over the past 12 months. The Standard & Poor's/TSX Capped Reit Index is down 8.7 per cent over the same period compared with a 8.2 per cent drop in the broad S&P/TSX Composite …