Construction projects set to slow

The latest building permit data indicate that Alberta’s construction sector will slow as the year progresses. In April, total building permits—an excellent forward-looking indicator for future construction activity—slipped 4.5 per cent from March.   April’s permit totals for commercial, industrial and government buildings experienced an 8.7 per cent increase from March and total permits are up 32 per cent from where they were last year. The increase in non-residential intentions was due to the institutional component. For several months, non-residential building permits have been at lower levels than compared to the recession of 2015-16. This is due to a significant amount of office real estate that has come online or is coming online in Alberta’s biggest cities.   But while there’s been an oversupply of commercial projects in the province, there are signs of an oversupply of housing, too. That means residential building permits have started to slow. Construction intentions for all types of housing fell 11.7 per cent ($95-million) in April from March, the lowest level of activity in five months. With rising interest rates and stricter mortgage lending rules, homebuilders may have to scale building back in the coming months.   Despite the lower levels of activity, building permits in Alberta are still strong. However, given the amount of office space coming online and the number of condo projects lining Alberta’s skies, construction projects will slow in 2018.