Construction of commercial, industrial and other non-residential buildings is on the rise in British Columbia and Saskatchewan, while Manitoba’s activity plunged in the first quarter of the year.
Data released by Statistics Canada shows non-residential construction rose 10% in B.C. and 12% in Saskatchewan from the first quarter of 2015 to the first quarter of 2016. Manitoba saw an overall decline of 21% over the same time period, while Alberta saw an overall decline of 7%.
(Non-residential construction data reflects commercial, industrial, and institutional and government construction. Non-residential building includes all buildings not intended for private occupancy whether on a permanent basis or not and excludes expenditures on residential construction and engineering work – such as bridges, roads, electrical dams. Statistics Canada’s data for non-residential construction is obtained from building permit surveys and capital repair expenditures.)
In the upcoming months, institutional and government construction values should strengthen as federal and provincial governments get their shovels in the ground in response to their infrastructure spending programs.
British Columbia
Non-residential construction in B.C. went up in part as a result of the continued upward momentum of commercial construction. It rose 9% over the past five quarters and 3% over the first quarter of 2016. Industrial construction was up 45% over the same period, contributing to the overall increase in non-residential construction in the province.
Commercial construction is the largest category by value of non-residential construction investment for the first quarter 2016, at $913 million. Institutional and government construction was $392 million, and industrial construction $175 million.
B.C.’s 2016 capital spending plan of $20.6 billion over the next three years includes public investment of about $9 billion for institutional and government spending on schools, hospitals and other institutional facilities. Investments are intended to support the BC Jobs Plan and infrastructure needs across the province.
Alberta
Alberta continues to feel the influence of low oil prices as investment in commercial and industrial buildings slows. The biggest percentage drop was in industrial construction at 41% since the first quarter of 2015. Commercial construction followed, although at a more moderate decline of 12%. And, no surprise to government budget watchers, institutional and government investment saw a large increase of 58% over the five-quarter period.
Investment in commercial construction continues to be the largest category by value of non-residential construction investment in Alberta. Investment in commercial construction for the first quarter of 2016 was $1.7 billion. Institutional and government construction was $662 million, and industrial construction $287 million.
In Alberta’s recently announced budget, the capital plan will support $34.8 billion in infrastructure projects over five years. Another $4.4 billion will be spent on ancillary projects self-financed by Alberta Health Services, post-secondary institutions and school boards. Excluding transportation projects, capital spending will be for continuing care beds, affordable housing, new schools and school modernizations.
Even with the slow economic climate, construction continues in Alberta. Cranes can still be seen in downtown Calgary and Edmonton as developers complete office buildings and other construction projects.
In Calgary, one big project where ongoing construction is taking place is at StoneGate Landing. The 1,000 acres and 11 million square feet of industrial and retail space will accommodate industrial, retail, hotel and office developments. The buildout lasts to 2021 at a project value of $1.5 billion. The project is located at the north east corner of Deerfoot Trail.
In Edmonton, the Winter Garden, the long-awaited entrance to the Edmonton Arena, a multi-use space that spans 104th Avenue, received its building permits from the city in February. This $230 million project (including a mixed-use commercial building) will keep construction humming in the downtown core until fall 2016.
Saskatchewan
Non-residential building construction in Saskatchewan increased 12% from the first quarter of 2015 to Q1 2016. Institutional construction investment increased by 52% over the period followed by commercial construction with 2%. Over the five-quarter period, industrial construction investment dropped by 8.6%.
Commercial construction in Saskatchewan leads the other non-residential construction categories by value. In the first quarter of 2016, commercial construction was $280 million. Institutional and government construction was $157 million, and industrial construction $57 million.
Government investment in long-term capital needs for tangible assets such as schools and hospitals will keep the construction sector busy.
Construction on Phase 2 of the $285 million Children’s Hospital of Saskatchewan in Saskatoon continues until 2019.
The provincial government is further investing $635 million building 18 elementary schools on nine new joint-use school sites in Saskatchewan using a P3 model. Construction began in 2015 with schools expected to be ready for students in September 2017. Six of the joint-use school sites will be located in Saskatoon and region and another three in Regina.
On Regina’s books is the completion of the Mosaic Stadium expected by this August. As part of the Regina Revitalization Initiative, the stadium will be a focal point for the new Taylor Field neighbourhood. Once the site is cleared in 2018, development of housing, offices and commercial space will begin. Construction is set to be complete by 2028.
Manitoba
Non-residential building construction in Manitoba decreased 21.3% from a high in the first quarter of 2015 to Q1 2016. Commercial construction dropped 25.4% and institutional construction 20.8%. Over the 12-month period, there was no change in the numbers for industrial construction.
Investment in commercial construction is the largest category by value of non-residential construction investment in Manitoba. Investment in commercial construction for the first quarter of 2016 was $205 million. Institutional and government construction was $117 million, and industrial construction $49 million.
The Government of Manitoba’s core infrastructure plan has focused on investing in transportation infrastructure to support Manitoba’s vision as a trade hub for Canada. Any changes to the direction of capital spending will have to wait for the newly elected Progressive Conservative government to release its first budget.
Manitoba’s construction sector will see a lift from the start of work on True North Square, a $40-million revitalization project in downtown Winnipeg. The one million square foot project will include a luxury hotel, Class A office space, and residential and retail space in four towers.
Parmalat Canada Inc. will be constructing a $50-million, 130,000-square-foot processing plant and warehouse facility in St. Boniface. It is expected to come online in 2017. The federal and provincial governments have pledged $2.5 million through the Growing Forward 2 (GF2) agriculture program.
Retail construction will get a boost from the construction of a $200-million, 400,000 square foot premium-fashion outlet mall in Winnipeg. The Outlet Collection Winnipeg mall is set to open in May 2017.
– Janice Plumstead is a senior economist