CanaData’s construction starts statistics improved slightly (i.e., were less negative) in June 2008 versus May. Grand total starts (i.e., residential, plus ICI, plus engineering) for the country as a whole were -17% in square footage and -27% in dollar volume terms. With respect to dollars, however, it needs to be explained that one large engineering project, that started in June 2007, has biased the numbers down. That project was the 1-A Eastmain hydroelectric project in northern Québec for $4 billion. As a result, a number of year-over-year comparisons have been thrown into a bad light. For example, Québec engineering starts are -85% year to date.

Through June of this year, total Canada residential starts have been -15% in square footage and -12% in dollars, versus January through June of last year. CanaData has calculated that multiple-unit starts (-20% in square footage) have been weaker than single and double residential starts (-13%). This is contrary to what Canada Mortgage and Housing Corporation (CMHC) is saying at this time.

Year-to-date total non-residential building (ICI) starts are now less negative than they were a month ago, according to CanaData. They are -20% in square footage and -18% in dollar terms at the halfway point of 2008 (versus -30% and -28% respectively after May). The smallest decline among the ICI sub-categories has been for commercial work (-14% in square footage and -10% in dollars).

The stand-out sub-categories in commercial work have been hotels/motels (+95% in square footage) and recreational buildings (+54%). Private and government office buildings combined are a little down. However, the biggest problem areas have been in retail and wholesale services (-33%) and warehouse and storage buildings (-55%).

Similar to commercial starts, institutional work is considerably less negative in the latest month. The declines through the first half of this year have been -29% in square footage and -25% in dollars (versus -43% according to both measurement criteria after May). Hospital starts (-50%) are down significantly, while educational buildings (-18%) have also fallen behind.

Industrial starts in both square footage and dollar terms are off by about one-third so far this year compared with last year. But the real shocker is to be found in engineering starts (-46%), mainly due to the Eastmain hydroelectric project starting in June of 2007. Elsewhere in engineering, bridge starts were +13%, but roads were -7%. Roadwork is currently accounting for the largest portion (i.e., almost half) of all engineering starts.

As for the ten largest project starts in June, Ontario was the most active province with six, while Québec and Alberta accounted for two each. By type of structure, the breakdown was commercial with five, institutional and engineering with two each and residential with one. (The Top 10 starts list for June 2008 appears on Reed Construction Data’s Market Insights website channel.)

The ten largest project starts in June of this year explain much of what is happening in the percentage change statistics. There were two hotel projects, with the largest being an addition and alterations to the Ritz-Carlton in Montréal. Also in Québec, there was a large bridge project on Autoroute 25 for $200 million.

As good news for the beleaguered auto sector, there was a start on a 500,000 square-foot corporate headquarters for Honda Canada in Markham, Ontario. Also in Ontario, and running counter to the general weakness in hospital starts, there was a beginning made on the 565,000 square foot addition to the Health Sciences Centre in London.

The “12-month moving total” trend graph shows a significant dip in engineering work, due to the Eastmain project being dropped in the latest month. ICI starts are continuing on a relatively flat plane, but at a high level.

Notes: CanaData’s construction starts are made up of new, addition and alteration work. There are dollar and square footage figures for new and addition work, but not for alterations.

The type of structure breakdowns are residential, non-residential building (also known as ICI to correspond with industrial, commercial and institutional) and engineering. These are all recorded in both dollars and square feet, except for engineering work (e.g., roads and highways, pipelines, electricity projects, etc.), where only dollars make sense.

CanaData, a statistics-gathering and forecasting product line of Reed Construction Data, calculates starts based on RCD’s extensive tracking of projects through all stages of construction.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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