Updated: Thu Jun. 04 2009 17:58:35

ctvcalgary.ca

Good news for tenants is bad news for building owners downtown.

Residential and commercial vacancy rates are rising and prices are falling.

Developers of the Waterfront project on the east side of Eau Claire are the latest to feel the pinch.

Two towers are slated to go up on the site and while they will go ahead as planned, developers say the market has changed dramatically since the project was announced.

"The money we are going to make is what you would call the economic minimum," says Eric Carlson of Anthem Properties. "It is tough. It is tougher than it was for sure."

Properties in the building are now being reduced by up to 187 thousand dollars and buyers who have already signed up will be getting a rebate.

According to Greg Kwong of CB Richard Ellis, Calgary has roughly 34 million square feet of inventory in the downtown core with another six million coming online by 2011.

That could push the vacancy rate to 18 per cent in two years.

The upside to the downturn is that construction costs have dropped significantly, allowing some developers to drop their prices without cancelling projects.