This is a city that can't help but grow, as the city's chief economist likes to say.

For Edmonton, it's already baked into the pie. The real question is: What kind of growth does this city want?

Will it remain an esthetically challenged, relentlessly utilitarian industrial burg -the "boiler room" of Canada, as Mordecai Richler once dubbed it?

Or will Edmonton evolve into something better -a more physically attractive, dynamic, culturally enriched 21st-century metropolis? The choice is ours.

When the planet's second-largest oil reserves are located in your backyard and crude is selling for $108 US a barrel, that unleashes huge opportunities.

No wonder more than $30 billion is pouring into new and existing oilsands projects every year. But most of the spinoff benefits are on the city's periphery.

Unfortunately, Edmonton's second-rate downtown core -unlike Calgary's -doesn't reflect the city's bright future. It's the hole in the doughnut, an underwhelming turnoff for residents, visitors, employers and employees alike.

Over the years, many senior execs have told me they've had a tough time recruiting senior staff to work downtown. Some firms simply moved to Calgary.

Although it's improving, Edmonton's gap-toothed core remains riddled with grimy parking lots, strug-gling retailers and acres of empty office space. In other cities, the demand for new condos and downtown office space would have filled these gaps years ago. But Edmonton isn't Calgary or Vancouver.

Despite its growing heft, this city has few major head offices. Even worse, many of the firms that are here shun the core, operating instead out of spartan digs in lowrent industrial parks.

? TD Tower: 70,000 square feet

? BMO Building: 55,000 square feet

? Manulife Place: 25,000 square feet

? GE Place: 200,000 square feet

Like the fabled gnomes of Zurich -the mysterious Swiss bankers who lived underground, counting their cash -too many of this city's top players are all but invisible, with no downtown presence.

The good news? There will soon be a golden opportunity to alter those dynamics and attract more firms downtown. And it has zip to do with the new arena redevelopment zone unveiled by the city this week.

Once Epcor, Capital Power and the federal Justice Department move into the new Epcor Tower later this year, the vacant office space in toptier downtown towers will balloon to 1.2 million square feet, says Cory Wosnack, a commercial real estate specialist with Avison Young.

That's more than 10 per cent of all the office space in the city's financial district, and it's equivalent to two new Epcor Towers. The empty space will be sprinkled throughout such trophy buildings as the TD Tower, GE Place (Epcor's current home on Jasper Avenue), Manulife Place and the BMO Building, across from Edmonton City Centre mall.

The looming space glut also includes more than 316,000 square feet of space that's expected to hit the market at Telus House and Scotia Place and 174,000 square feet still to be filled at the new Epcor Tower.

"The vast majority of the space that's going to be available is in Class A or AA buildings. So these are very good-quality buildings," Wosnack says.

Now, with growing competition among property owners to lure new tenants downtown, he says local firms will have a rare opportunity to move into top-quality office space at rockbottom rates, with juicy inducement packages thrown in.

"We'll be seeing rental rates in the $18-to $20-per-square-foot range for Class A and AA buildings in the financial district, versus $16 to $18 in the suburbs. So you're looking at just a 10-per-cent gap in rates, with inducement packages in the financial district double those in the suburbs," Wosnack says.

If you're a firm that's looking for 50,000 sq ft of contiguous office space in Edmonton, there are currently only three options in the suburbs and nine in the core, he notes. All of the latter are in Tier 1 buildings.

"If you want to be in the suburbs and you want to be in a new office building, you'll be paying rates of around $25 to $27 per square foot. Or you can move downtown into a topquality building that's had millions of dollars worth of upgrades, and pay rates of $18 to $20 a square foot, so it's a pretty attractive alternative."

Although local firms have historically had "champagne tastes on a beer budget" when it comes to office space, Wosnack says times are finally changing.

With another energy boom looming and worker shortages forecast by 2012, companies are already duking it out to attract top employees. And that means offering more attractive work environments.

"It really is going to result in a very healthy office market two years from now, where we'll have single-digit vacancy rates and more people working downtown," Wosnack predicts.

His own firm, Avison Young, is a prime example. The company is moving into new space in the Bell Tower in June.

"That's going to be our new base, since we've outgrown our space here (at Scotia Place). We're preparing to hire more staff and we're gearing up for business growth. So we're taking advantage of an outstanding real estate deal that wouldn't have existed two years ago."

glamphier@edmontonjournal.com