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COASTAL LIVING: Construction starts promising
Overall construction activity on Vancouver Island is off to a good start in 2013 with an increase in the first quarter from the previous quarter.
Construction employment climbed 8.4 per cent in April to 27,000 positions while building permits more than doubled in March, rising to $113.4 million from $53.4 million in February. Major projects under construction rose 4.6 per cent to $10.3 billion.
“The first quarter trends are consistent with the increase in project opportunities in the association’s BidCentral and planrooms,” said Greg Baynton, CEO of the Vancouver Island Construction Association. “It is an encouraging start to the year, however, the industry still faces many challenges given that the economy is growing slowly and real estate activity is still below normal.”
Notable highlights during the first quarter include the surge in commercial building permits in Victoria, which increased 251 per cent to $18.8 million over February 2013 and the spike to $14.6 million in industrial permits in Nanaimo.
Total investment spending declined 5.3 per cent to $85.5 million in the first quarter of 2013 from the fourth quarter of 2012 in the Victoria Metropolitan area.
The only sector to post a gain was commercial with a 3.1 per cent increase. Public sector spending dropped nearly 25 per centin the quarter while the smaller industrial sector fell 36 per cent.
Year-over-year comparisons were negative across all sectors led by a 4.2 per cent decline in the public sector.
Second quarter 2013 total spending is expected to slip lower on less government and industrial spending. Commercial building spending is likely to rise based on the increase in building permits.
“The region’s near-term outlook is for a seasonal rise in construction activity, particularly in residential permits and in employment, which typically increase during the spring and summer months since the weather is more conducive to construction activity,” said Baynton.
But overall, the outlook for building permits in 2013 is for below-average performance since the regional economy and population will grow at a modest pace.
Cost pressures will remain low, but will likely increase later in 2013 when the macro economy is operating at a higher level.
“Beyond 2013, investment prospects will depend on demand and the economy. The expected improvement in growth in the U.S. and Asian economies during 2014 should bode well for B.C. and the Island,” said Baynton.