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Non-residential construction intentions slide lower

Non-residential construction intentions slide lower

Posted on: 9/20/2017 | Author: ATB Financial's Economics + Research Team

Alberta’s recession may be in the rear-view mirror. Still, certain sectors are playing catch-up to the downturn that gripped the province over the last few years. Construction activity, for example, is only now starting to show clearer signs of slowing in the coming months.

The graph below shows building permits for non-residential construction projects in Alberta. These include commercial projects (such as office towers and retail shops), industrial buildings (such as factories and refineries) and institutional and government construction (such as schools, hospitals and museums). As a group, the trend is down.

The red line on the graph is the 10-year average dollar value for building permits in Alberta, approximately $530 million per month. The heavy blue line shows the six-month trend over the last decade—and that trend is now well below the 10-year average.

The biggest pull-back, not surprisingly, is in commercial building activity. Office tower construction in both Edmonton and Calgary over the last few years of the boom continued into the recession, and now both cities are facing a glut of office real estate. As a result, fewer new projects are now on the drawing board. Permits for commercial projects may stay low for a while as all of that office space waits to be absorbed by tenants. Industrial construction permits have also pulled back.

Spending on government and institutional construction projects is the only category of non-residential construction that continues to track close to the 10-year average. Non-residential building permits, graph?

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