CanaData has slightly lowered its 2007 square footage forecast for total Canada non-residential buildings in response to actual results through October. Total non-residential building starts are now expected to be 95.5 million square feet in 2007, which has been revised down from the previous forecast (issued in September 2007) of 99.0 million. However, total ICI (industrial, commercial and institutional) starts in 2007 will still be a big step up from their level in 2006 at 78.4 million square feet.

The largest jumps will come in commercial and institutional work. Industrial starts will be essentially flat versus last year. In the commercial category, office building construction is strong at this time, with starts across the country ahead nearly 40% versus the same period last year. Hotel and motel work (+30%) and shopping centres/plazas (+53%) are the two other categories doing particularly well this year in terms of starts square footage.

Institutional work is up significantly due to the need for health care facilities (+84% year to date). This is being made possible by an abundance of government tax receipts flowing in as a result of the strong economy.

Two Reasons for the Easing in the Outlook
The reasons for some easing in the estimated outlook, both for this year and next, are the climb in value of the Canadian dollar versus the U.S. dollar, which will hold back some investment by the manufacturing sector, and concern that there may be some degree of slowdown in the U.S. economy in the period ahead.

This year is likely to be the peak for non-residential building starts in this economic cycle. CanaData’s 2008 forecast calls for an easing of total ICI starts to 88.0 million square feet.

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