B.C. leads the nation in total investment in non-residential construction
Joanne Lee-Young
Sun
CREDIT: Ward Perrin, Vancouver Sun Workers put the finishing touches on a new Canadian Tire store at Cambie Street and 6th Avenue in Vancouver.
Investment in non-residential construction in B.C. is growing faster than anywhere else in Canada, a trend that is breaking some records.
B.C. posted a 19.1-per-cent jump in total investment in non-residential buildings, reaching a new high of $932 million in the second quarter of this year compared to the same period in 2004, Statistics Canada reported Monday. This pace beat out Alberta, where such investments topped $1 billion for the first time, but only grew at 13.4 per cent.
In both B.C. and Alberta, investment in commercial buildings is starting to rise due to the construction of office buildings and shopping centres, according to Statistics Canada.
“We are just at the start of an unprecedented period of construction activity in B.C. We haven’t seen these [non-residential construction] numbers ever before in the history of B.C. in terms of the dollar values,” Keith Sashaw, president of the Vancouver Regional Construction Association, said.
Across the country, non-residential construction in B.C. cities posted some of the biggest percentage increases from the first to second quarter of this year. Abbotsford reported a 78.3-per-cent increase; Victoria posted a 37.3-per-cent increase; and, Vancouver recorded a 19.3-per-cent increase, bulging $92 million to $569 million for the largest dollar volume change of all metropolitan areas surveyed. Elsewhere, only Calgary, at a 20.4-per-cent increase, and Saskatoon, at a 35.3-per-cent increase, showed comparable growth. However, both cities recorded considerably smaller dollar volume changes at $75 million and just $14 million, respectively.
While residential construction may start to show some initial signs of slowing growth in B.C., non-residential building seems to be at the beginning of an upswing.
“The return of the strong market in the residential sector preceded the non-residential by about two years,” Sashaw said.
We began to see a strong turnaround in the residential construction towards end of 2002 and into 2003, when it really began to kick into high gear. It went very quickly and throughout the province. But it’s only been in the last eight months or so that we have seen a resurgence in the non-residential sector.”
The non-residential sector is divided into industrial buildings, such as mines and mills used for manufacturing and processing; commercial buildings like retail stores and warehouses, plus everything from hotels to funeral parlours; and institutional and government buildings.
Much of the growth in B.C.’s institutional sector is being attributed to an aggressive capital spending campaign by the province’s ministries of education and advanced education. From April to May alone, the value of institutional building projects almost tripled to $109 million, mainly due to spending for the construction and expansion of schools and major universities. In Vancouver, the dollar value of permits for institutional and government buildings increased 140 percent, dwarfing similar figures for commercial and industrial buildings at only 76 and 71 percent, respectively, year-on-year from January to May, according to the VRCA.
At Stuart Olson Construction Inc. in Richmond, executive director Ron McFee says that 75 to 80 per cent of the company’s gross annual revenue now comes from non-residential construction. “It would have been different two years ago. Practically, there has been a huge upsurge, specifically on the institutional side.” Stuart Olson is involved with two major science facility projects at Simon Fraser University and three at the University of British Columbia.
While Statistics Canada said that in both B.C. and Alberta, investment in commercial buildings is starting to rise due to the construction of office buildings and shopping centres, McFee said that the “commercial side of things has not recovered wholly, but it is starting to climb as vacancies, especially downtown, start to climb.”
Even with Stuart Olson’s heavy emphasis on non-residential construction these days, “we haven’t landed a commercial [deal] yet, but we are looking and are confident that the economy is going to be robust and will drive the commercial engine.” As this happens, McFee says he expects ongoing challenges both in recruiting skilled labour and management, as well rising prices for materials.