Real estate in Calgary, a gateway city to one of the world's largest petroleum troves in Canada's Alberta Province, has been on a tear in recent years.

Nine office buildings are under construction in the downtown including the 58-story BOW tower, slated to be natural-gas giant EnCana Corp's new headquarters and Canada's tallest building outside Toronto when completed in 2011. Demand from new workers streaming into the region nearly doubled median home prices since 2004. And even as the credit crunch has delayed projects elsewhere, developers are moving ahead with the three billion Canadian dollar, or US$2.98 billion, StoneGate Landing project.

EnCana's new headquarters, the BOW tower, belies the notion that Calgary's boom is slowing. But it is.

Beyond the construction sites, there are signs the energy hub is catching its breath as the breakneck pace of the real-estate market and the local economy downshifts.

Prime office rents in downtown Calgary, while remaining the priciest of Canada's top 10 markets, have declined for the first time since 2002, as they began to soften in the third quarter and slipped about 1.8% to C$45.13 a square foot annually in the first quarter from the end of last year, according to CB Richard Ellis. And while the region's market for industrial space remains the tightest in Canada, year-over-year rent growth fell to 7.2% in the first quarter from 18.8% from 2006 to 2007.

"It's still a boomtown," says Greg Kwong, regional managing director for CB Richard Ellis in Calgary. "It's just a smaller boom."

In part, Calgary may be a victim of its success as some say workers unable to find affordable housing are leaving town. To wit: Home sales in the region slumped about 34% in the first quarter and median prices fell in March from a year ago.

Mr. Kwong says flattening rents and a rise in office vacancies can be traced in part to energy companies' being more conservative amid a global economic slowdown and fundamental factors.

Some companies are waiting to see the impact of the Alberta government's new royalties structure, Mr. Kwong says. Set to go into effect next year, the royalties structure will give the government a bigger percentage share of the pie from energy production. Still, the shift in Calgary amounts to a soft landing, says Mario Lefebvre, director of the Center for Municipal Studies at the Conference Board of Canada. He forecasts the Calgary region's gross domestic product will still rise by about 4.2% this year, about the same as last year but down from 7.7% in 2006.

Indeed, many brokers and owners aren't worried, noting that the slower GDP pace marks a return to a more sustainable rate of growth.

One project banking on continued demand is StoneGate Landing. WAM Development Group and Alberta Investment Management Corp. are planning to deliver about 10 million square feet of industrial buildings, two million square feet of office, and a 1.5 million square feet of retail on former farmland in the northeast quadrant of the city near the Calgary airport.

But some developers say they're going to hold off for now on new projects. Randy Magnussen, executive vice president of Bentall Capital LP's western region, says Bentall will be completing its Jamieson Place office tower next year and has no current plans for more.

Write to Maura Webber Sadovi at maura.sadovi@wsj.com

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