CALGARY, Alberta—When Mayor Naheed Nenshi broke ground on Brookfield Place, this city’s signature skyscraper project, he said the energy capital was “well into an arms race” of tall-building construction.

That was in the fall of 2013, amid a boom fueled by high oil prices that had the commercial real-estate market in Canada’s oil capital rivaling that of Houston. Space was in short supply, vacancy rates were in the low single digits, and rents commanded a premium. The groundbreaking on Brookfield Place came not long after Encana Corp. ECA -3.75 % ’s The Bow, a 58-story tower, opened in late 2012.

Today, slumping oil prices have pushed a record amount of unleased space downtown back onto the market even as construction of nine major office buildings is under way. Along with Brookfield Canada Office Properties, BOXC -1.54 % which plans to open the first tower of Brookfield Place in 2018, some of Canada’s other biggest real-estate developers are investing here. They include Oxford Properties Group, the real-estate arm of pension fund OMERS, Cadillac Fairview Corp., which is owned by Ontario Teachers’ Pension Plan, and insurance giant Manulife Financial Corp. MFC -1.98 %

Calgary’s vacancy rate climbed to nearly 11% during the first quarter from 8.5% at the end of 2014, according to commercial real-estate firm Colliers International—a shift that has pushed down rents, especially in the sublease sector. Now, some landlords are offering free rent or money for upgrades such as new carpet or furniture, marking a big change from just a few years ago when oil companies were clamoring for more space.

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