Despite Alberta’s economic doldrums, Edmonton’s construction industry appears to be booming — for now.
The City of Edmonton issued building permits worth almost $2.4 billion in construction value in the first six months of this year. That’s a 14-per-cent increase from the same period last year and a 33-per-cent increase over the five-year average.
The City announced the surge in building permits Wednesday, the same day the Canadian dollar dropped to levels not seen in more than a decade as the price of oil and gold both came under pressure.
The city’s chief economist John Rose said the construction is resulting from rapid employment and population growth between 2012 and 2014. People who moved to the region in that time are still looking to buy houses, and high employment means there’s a need for more office space.
“This is the building and construction industry catching up to a period of very rapid growth as opposed to the response to the immediate conditions,” he said. “On the housing side and commercial space, we have a lot of suppressed demand.”
“I would not anticipate that next year we’d have anything near what we have this year,” Rose said.
Brad Ferguson, president and CEO of Edmonton Economic Development Corp., said the figures give an “artificial” sense of security.
Businesses are cutting capital expenditures as oil prices tumble, and cuts are expected to continue.
“We’re dealing with the global market in retraction mode, and that’s affecting us in Alberta and northern Alberta,” he said. “It dries the Edmonton market.”
Edmonton still has a relatively low vacancy rate of 2.4 per cent — an improvement over the one per cent vacancy rates experienced in the city over the past several years. Rose said he is not worried about an “overbuild” situation on either new residential or commercial construction, and does not think developers are putting up new buildings based on speculation.
“You’re talking about pretty astute developers. They don’t put up buildings until they have a lot of that space pre-rented to occupants. I’m not too concerned about an overbuild situation,” he said.
The $2.4-billion worth of building permits includes residential, commercial, industrial and institution building construction.
Some of the biggest building permits to get the green light in the first six months of this year include a permit for part of the 62-storey Stantec office and condominium building near the new downtown arena, worth $91-million in construction value; a permit for part of the Edmonton Civic Tower, worth $23-million in construction value; and a permit for part of the Brewery District development at 121st Street and 104th Avenue, worth $12.7-million in construction value.
The loonie was down Wednesday 0.53 of a cent to 76.70 cents US, the lowest level since Sept. 1, 2004.
Oil prices dropped below the US$50 mark in trading Wednesday, settling at US$49.19, while gold lost US$12 to fall to $1,091.50 an ounce.
With files from The Canadian Press