CanaData’s Latest Starts Statistics

Through the first quarter of 2009, non-residential construction starts in Canada are headed significantly downward. This is in keeping with the latest revision to CanaData’s forecast which is calling for total non-residential building starts this year, at 54.0 million square feet, to be the lowest in the history of the series, dating back to 1970.

By Type of Structure

It is privately-initiated work that is being cut back the most. Commercial starts Canada-wide are -72% in square footage and -51% in dollar-value terms. Industrial starts, which were weak to begin with, are -65% in square feet and -67% in dollars. It is only in the public spending sphere that starts have stayed at reasonable levels. Institutional work is -13% in square feet and +32% in dollars and engineering work is -11% in dollars. This brings total non-residential starts (i.e., buildings plus engineering) to -20% in dollars.

Reasons for the Collapse in Private Starts – Now Counting on Public Starts

The credit crisis, the world-wide recession, falling commodity prices and a lack of business and consumer demand for many key goods and services are among the factors causing private sector owners to postpone or cancel investment plans. In response to the serious drop-off in private sector new construction, the public sector is stepping forward.

Governments at all three levels –federal, provincial and municipal − are pushing out infrastructure spending plans. How quickly this work will proceed depends on assuring sometimes-joint financing and speeding up environmental and local neighbourhood approvals processes. There is evidence of some success in moving quickly.

By Region

The following looks at the regional highlights and low points from the first quarter.

Atlantic Region starts have performed better than in much of the rest of the country. There was particular strength in government office buildings, hospitals, schools and roads. Most of the gains were in terms of dollars rather than square feet. This indicates renovation work as opposed to new structures in the case of buildings.

Québec has recorded some good starts strength in recreational buildings, bridges and especially power generating projects. The most dramatic declines have come in private office buildings and educational projects.

Ontario has shown some good increases in recreational buildings, hospitals, public assembly buildings (i.e., the Ottawa Congress Centre), schools and sewer and water treatment work. However, these have been more than offset by declines in hotels/motels, private office buildings, retail projects and electric power generating work.

Manitoba has pleasantly surprised in private office buildings, retail and sewer and water facilities. Thanks to a diverse industrial base, the province has turned in an overall non-residential starts increase, one of the few provinces to do so. Saskatchewan has also performed okay, with a level of non-residential starts in dollars about the same as last year. The largest type-of-structure increase has come in defence and law enforcement.

Alberta has suffered the most damage among all the provinces. Private office building work has come to a standstill, although the public sector is proceeding with at least one large project − the Federal Building and Centennial Plaza alterations in Edmonton. Retail and education projects are two other structure categories with major declines.

British Columbia has significant bridge construction upcoming, but for now the starts in that category are down year to date. So is retail, recreational building, warehouse, educational and power generating work. Providing some floor to the total dollar volume, however, have been hospital and defence/law enforcement construction starts.

Finally, Nunavut in Canada’s northeast had the largest individual non-residential construction project in the country in the first quarter. There was a start on the Meadowbank gold mine by Agnico-Eagle for nearly $400 million in February.

For a table on CanaData’s first-quarter construction starts (including residential), click here. For CanaData’s latest square footage forecasts, click here.

Alex Carrick