Non-residential Building Starts Forecast to be 76.0 Million Square Feet in 2008
The accompanying table sets out CanaData's latest square footage forecasts for ICI construction in Canada, by region, out to 2010. ICI stands for industrial, commercial and institutional. These are the three major non-residential building construction categories.

The 2008 commercial starts figure has been left the same versus the previous forecast, made in March, but both institutional and industrial have been trimmed somewhat. The net effect is to yield a total square footage forecast for 2008 that is revised down from 79.5, made in March, to 76.0 now. Last year's level was 89.1 million square feet. A further cyclical decline is expected in 2009, to 72.5 million, before recovery gets underway again in 2010, at 75.0 million.

Overall employment growth and retail sales stayed strong through the first quarter of this year, providing the impetus to proceed with consumer-related commercial construction. Office-based employment also held up, thanks partly to strong stock market activity, and record low vacancy rates are driving expansions to fill space requirements in a number of major centres.

Institutional starts, however, have been disappointing so far this year. Government tax cuts (e.g., the GST down to 5% and lower corporate taxation rates), combined with unexpected cost hikes (e.g., fuel for public transit and asphalt for roadbuilding), appear to be making the public sector more cautious about undertaking capital spending programs.

In the industrial category, manufacturing was a particularly weak sector in the first-quarter national accounts. Much of this was due to automakers cutting back on production and lowering inventories due to a fall-off in demand from across the border in the U.S. However, the run-up in value of the Canadian dollar versus the greenback has put a damper on export sales generally and is causing industrial investment to slow to a trickle.