Why Calgary may be starting to climb back from the agonizing recession
Three years ago today, oil traded at nearly $107 US a barrel. Things were looking pretty bright in Calgary that summer day. The city was rebuilding from the flood the year before, the job market was tight, salaries high, the real estate market was busy and prices buoyant.
However, by the end of the market day, oil had lost a little more than a dollar, beginning the brutal climbdown that pushed Alberta into an agonizing recession.
Now, with oil still struggling to top $50 a barrel, Calgary is a different city, one just starting to recover from years of recession.
“When you look at downtown Calgary, that sense of electricity in the air that’s always been there, it’s still there, but it’s a bit duller now,” said Calgary’s Mayor Naheed Nenshi, in an interview with CBC News.
‘I’ve been up on stages and been yelled at for saying this is good for us.’ – Jim Button, co-founder Village Brewery
“Within a year we went from the lowest unemployment rate in any major city, where we had been for many, many years, to the highest,” he said. “We went from zero per cent commercial vacancy downtown to nearly 30 per cent. I love roller-coasters, but this is too much.”
The roller-coaster metaphor has gotten quite the workout in Alberta in the past three years, with much discussion about how to get off it — something that is tricky to do on the way down.
How bad did it get?
The price of oil hit bottom in the winter of 2016, around the time when mass layoffs were the norm.
Sharlene Massie owns the firm About Staffing, and in mid-2016 she had laid off much of her staff and was no longer taking a paycheque herself.
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“The fall of 2014, that was really hard,” she said. “And by mid-2015, everyone was starting to figure out that this was going to last a while, and by mid-2016, everyone was fed up, something has got to happen here, we can’t survive this. I had thousands of applicants every single week and we had hardly any business coming in the door.”
At its peak, Calgary’s unemployment rate topped 10 per cent, with more than 90,000 people looking for work in late 2016. That is uncomfortably high, but the unemployment rate alone doesn’t tell the full story of a job market.
More Calgarians tend to be in the workforce, nearly 75 per cent at last count, and even when the unemployment rate got high, 66 per cent of residents still had a job, higher than in any other major city.
Housing, restaurants mostly stable
That relatively high employment rate explains why the housing market, at least for mid-priced homes, remains stable. While the average home price dropped nearly 12 per cent between 2014 and 2015 and has yet to recover, that was influenced by price drops in the most expensive homes.
‘What I’ve seen is the mid-range, the $375,000 to $500,000 proprieties, have been selling and keeping our market afloat,” said Len Wong, a Calgary Realtor with Re/Max.
Wong said that people buying those homes don’t tend to work in the oilpatch and were more likely to have hung onto their jobs.
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Restaurant sales were also stable, confirming anecdotal evidence that it didn’t get much easier to find a table at Calgary’s hotspots during the recession. In June 2014, restaurant sales in the province (they aren’t broken down by city) totalled nearly $733 million. In June 2016, they topped $747 million, and in March 2017, $744 million.
Jim Button, a co-founder of Village Brewery, a local craft brewer, said his company managed to grow through the recession.
“All of our bar and restaurant partners in the downtown core, they were all hurting bad, upwards of 50 per cent drops in sales and some were closing,” he said. “But at the same time, all the bars and restaurants in the suburbs went up.”
Sense of optimism in city now
There is now a sense that Calgary is starting its comeback. The unemployment rate is slowly starting to come down, and although there are still 85,000 people looking for work in the city, Sharlene Massie said she is hiring back her staff and getting busy again, both with oil and non-oil jobs
“January was busier than December, February was busier than January, then just recently, in the last month or so, it’s gone crazy for us,” she said.
“They laid off to the maximum, got rid of as many people as they could, cut their expenses as much as possible, and now the business is starting to trickle in for them, so they’re really busy and they’re hiring.”
As the economy improves, everyone can agree that the next step is not to wait on the price of oil to improve.
“I’ve been in so many meetings in the past six months to a year, whether economic development, tourism or the chamber [of commerce] talking about this idea of expansion, not diversification, but expansion,” said Button. “Sure, if the oil and gas sector came back, we would take it, but what are we legitimately going to do to prepare for an economy without $100 oil.”
‘It’s a shift’
Nenshi points to the purchase of an empty office building in the city’s downtown by Aspen Properties. It used to contain oil workers, but Aspen has been outfitting it with putting greens and an indoor dog park to attract tech companies.
“They’ve completely converted it to attract startups and small businesses and tech companies that had no place in downtown Calgary before. It’s a shift,” he said.
Button, the brewer, thinks there is an argument to be made that this downturn was good for the city.
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“I’ve been up on stages and been yelled at for saying this is good for us,” he said. “I can hire employees, people are leaving the [oil] industry and starting new companies, chasing their dreams, there’s more discussion now on innovation and all sorts of industries outside the oilpatch,” he said.
Button helped launch the Best of Calgary awards during the downturn, in the hope of sparking conversation on how to make the city a better place to live.
“One of the big things was expansion, it was immigration, it was arts, it was community, all those things we don’t get to talk about normally, because as soon as you talk about them and the energy industry goes up, everyone gets pulled into the energy vortex.”