vancouver island construction reportfor q2 2020 report 2020 q2 8.12.2020...vancouver island...

1 Vancouver Island Construction Association Quarterly Report | 250-388-6471 | www.vicabc.ca

Vancouver Island Construction Report for Q2 2020

Summary Vancouver Island construction sector activity in the second quarter of 2020 was pushed down by the COVID-19 pandemic.

Building permits usually rise in the second quarter of the year on the seasonal increase in residential activity but total building permits issued Island-wide decreased 14 per cent to $506.6 million compared to the first quarter of 2020.

Residential permits stayed at the same level as in the first quarter while non-residential permits were down 54 per cent. This decrease was across all categories, with the largest decline in institutional-government permits followed by commercial permits.

Investment spending on non-residential building construction in the Victoria metropolitan area decreased nearly five per cent in May 2020 from the prior month, continuing a declining trend.

Victoria’s residential building construction investment spending surged in May 2020 to $163.49 million following a pandemic-related contraction in April.

Building construction cost increases were higher in residential than in the non-residential sector, though modest overall and consistent with the declining trend evident since 2018.

Construction industry employment declined across the Island, with the largest decreases outside the Victoria metro area.

The pandemic and the predicted second wave will play an important role in the region’s economy and construction industry. As a result, the outlook is uncertain.

http://www.vicabc.ca/


Table of Contents

Building Permits ..................................................................................................................................... 3

Non-residential Building Construction Investment – Victoria CMA .................................... 10

Residential Building Construction Investment – Victoria CMA ............................................. 11

Building Construction Costs – Victoria CMA ................................................................................ 12

Major Projects Inventory ................................................................................................................... 14

Construction Employment ................................................................................................................. 15

Outlook ..................................................................................................................................................... 16

Statistical Appendix ............................................................................................................................. 17



Building Permits

VANCOUVER ISLAND – COAST

Building permits issued in Q2 fell 14 per cent from Q1. The impact of the COVID-19 pandemic began with a sharp drop in February 2020 followed by slowly improving permit activity. June 2020 saw a surge due to the accumulated demand backlog.

Non-residential permits fell 54 per cent in Q2 from Q1, led by a 72 per cent drop in institutional-government permits and a 37 per cent decline in commercial permits. Industrial permits were down 28 per cent.

Residential permits held steady at $434 million in the first two quarters of 2020, though the number of dwelling units declined 21 per cent from Q1. Q2 residential activity is usually 20 per cent higher than in the first quarter.

Compared to the same quarter last year, permits were lower across all categories with non-residential down 45 per cent and residential 16 per cent lower.

Year-to-date building permits were 13 per cent lower than last year.

Statistical Appendix



ALBERNI-CLAYOQUOT REGIONAL DISTRICT Total building permits rose 31 per cent in Q2 over Q1, bucking the regional trend. However,

year-to-date permit activity was 12 per cent lower compared to one year earlier, in line with the region’s trend.

Residential permits climbed 37 per cent in Q2 over Q1 and put first half activity nine per cent higher than last year.

Non-residential permits edged 14 per cent higher in Q2 on a 39 per cent jump in commercial permits over the first quarter.




Capital Regional District

Building permits dropped 27 per cent in Q2 over the prior quarter with declines in both non-residential and residential activity.

However, permit activity was slightly higher compared to the same quarter in 2019 and on a year-to-date basis. In the first half of 2020, permit values were 10 per cent higher than in the same period last year on the strength of residential activity.




Cowichan Valley Regional District Residential permits issued increased 32 per cent during Q2 over Q1 and pushed total permits 11

per cent higher. Non-residential permits declined 40 per cent.

Compared to last year, total permits were down 5 per cent from the same quarter and 21 per cent on a year-to-date basis.

Residential permits in the first half of 2020 were only three per cent lower than in the same period last year.




Mount Waddington Regional District

Total building permits were modestly higher in Q2 on the strength of residential activity.

Compared to last year, total permits were lower than in the same quarter and in the first half.


Powell River Regional District

Total building permits edged three per cent higher during Q2 over Q1 on more residential activity.

All comparisons to 2019 activity were lower.




Nanaimo Regional District

A strong performance for building permits during Q2 played out in Nanaimo. Total permits were 76 per cent higher than in Q1 on large gains in both non-residential and residential permits.

Residential permits were 62 per cent higher at $109.9 million in the Q2 over the prior quarter.

Non-residential permits shot up in the quarter due to a $14.2 million public building permit issued in Nanaimo City during May 2020.

Total permits decreased 49 per cent year-to-date basis from 2019.




Strathcona Regional District

Total building permits climbed 33 per cent in Q2 on a similar gain in residential permits.

In the first half of this year, total permits were 29 per cent lower than in the same period last year with non-residential down 69 per cent and residential off 11 per cent.




Non-residential Building Construction Investment – Victoria CMA

Total investment spending decreased 4.8 per cent during May 2020 from the prior month due mainly to an 8.2 per cent decline in commercial buildings.

The monthly trend in total spending during the past six months has declined mainly from commercial and public sector buildings.

Compared to the first five months of last year, total spending was 18.9 per cent lower while institutional and government activity was down 45.4 per cent.

Non-Residential Building Construction Investment, Victoria Metropolitan Area – Millions of Dollars

Period Total Industrial Commercial Institutional-Government

Dec-19 34.13 3.93 20.53 9.67 Jan-20 33.81 4.08 20.47 9.26 Feb-20 33.55 3.79 21.32 8.43 Mar-20 31.81 3.66 20.62 7.54 Apr-20 31.53 3.77 19.96 7.80 May-20 30.02 3.84 18.33 7.85 % change May-20/ Apr-20

-4.8 1.9 -8.2 0.6

Source: Statistics Canada, VICA. Note: Seasonally adjusted, all types of work.

Non-Residential Building Construction Investment, Victoria Metropolitan Area, Millions of Dollars

Period Total Industrial Commercial Institutional-Government

2018 41.92 2.45 21.19 18.29 2019 38.04 3.43 21.59 13.03

% change -9.3 40.0 1.9 -28.8 Jan-May -19 39.62 2.35 22.29 14.97 Jan-May -20 32.14 3.83 20.14 8.18

% change -18.9 62.6 -9.7 -45.4 Source: Statistics Canada, VICA. Note: Actual not seasonally adjusted.



Residential Building Construction Investment – Victoria CMA

Total residential investment spending rebounded strongly during May 2020 over the prior month’s COVID-19 contraction.

Spending on single family dwellings saw the larger rebound in May following April’s sharp and sudden plunge.

Compared to the first five months of last year, total spending was 4.3 per cent lower from less spending on single dwellings while multiple-unit dwellings saw 14.4 per cent more spending.

Residential Building Construction Investment, Victoria Metropolitan Area, Millions of Dollars

Period Total residential

Single dwellings

Multiple dwellings

Dec-19 157.88 74.96 82.92 Jan-20 163.27 72.78 90.48 Feb-20 161.60 63.00 98.60 Mar-20 168.44 62.54 105.91 Apr-20 111.19 25.87 85.32 May-20 163.49 68.55 94.94 % change May-20/ Apr-20

47.0 165.0 11.3

Source: Statistics Canada, VICA. Note: Actual not seasonally adjusted.



Residential Building Construction Investment, Victoria Metropolitan Area, Millions of Dollars

Period Total residential

Single dwellings

Multiple dwellings

2018 172.27 76.18 96.10 2019 150.30 73.53 76.77

% change -12.8 -3.5 -20.1 Jan-May -19 146.56 71.75 74.82 Jan-May -20 140.24 54.64 85.60

% change -4.3 -23.8 14.4 Source: Statistics Canada, VICA. Note: Actual not seasonally adjusted.

Building Construction Costs – Victoria CMA

Residential building construction costs are increasing at a slightly faster pace than in non-residential construction. The year-to-date increase over last year was 2.5 per cent in residential and 1.0 per cent in non-residential reflecting a more active residential sector.



Building Construction Cost Index, Victoria Metropolitan Area

Period Non-residential Residential

2018 123.1 122.1 2019 127.8 127.8

% change 3.9 4.7 Jan-May -19 127.4 127.0 Jan-May -20 128.7 130.2

% change 1.0 2.5 Source: Statistics Canada, VICA.

Note: 2012 = 100

The composite construction union wage rate was little changed in the quarter and from a year ago.

Construction Union Wage Rate Index, Victoria Metropolitan Area

Period Composite Structural trades

Architectural and finishing

trades

Mechanical and

electrical trades

Engineering and

equipment trades

2018 110.6 108.3 116.8 111.4 108.4 2019 110.6 108.3 116.8 111.4 108.4

% change 0.7 0.7 0.5 0.4 1.4 Jan-May -19 110.7 108.5 116.8 111.4 108.4 Jan-May -20 111.0 108.9 117.0 111.5 110.3

% change 0.3 0.3 0.2 0.1 1.7 Source: Statistics Canada, VICA. Note: Includes selected pay supplements, 2015 = 100.



Major Projects Inventory

The dollar value of major projects held steady in the latest quarter compared to the prior three quarters though the projects on hold remained at the higher level.

The large decline in the year-over-year quarter comparison is due to the removal of the $30 billion Sarita LNG project on the northern island.

Major Projects Summary (Millions of dollars) - Vancouver Island and Coast

Period Proposed Started Completed On Hold Total Q4-2018 45,317 12,834 195 2,223 60,569 Q1-2019 16,152 11,923 985 2,073 31,133 Q2-2019 16,449 11,838 100 2,153 30,540 Q3-2019 13,665 11,693 337 5,453 31,148 Q4-2019 13,733 11,807 75 5,453 31,068 % change Q4-2019- Q3-2019

0.5 1.0 -77.7 0.0 -0.3

% change Q4-2019- Q4-2018

-69.7 -8.0 -61.5 145.3 -48.7

Source: Major Project Inventory, various issues.

Major Project Status Changes, Vancouver Island and Coast, Fourth Quarter 2019 Status Municipality Project Est. Cost ($ mil) Proposed Courtenay Ocean Front Village Care Facility 28 Duncan Cowichan Secondary Scholl Replacement 82 Nanaimo Riverstone Place 20 Harbourview Condominiums 60 Nanaimo Fire Station 17 Victoria Haven Condominiums 20 Started Comox Valleyview long Term Care Facility 28 Comox Valley Water Treatment Plant 111 Victoria The Haro Condominiums 25 View Royal Thetis Lake Condominiums 25 Completed Saanich Travino Condominium Development 40 Victoria Black and White Condominium 20 Cook Street Village Residential Project 15 Source: Major Projects Inventory, Q4 2019



Construction Employment

Construction employment decreased in the second quarter compared to the prior quarter due to a large loss in the region outside of Victoria.

Through to June 2020, construction employment in the Victoria metropolitan area was 10.2 per cent higher than in the first half of last year while a 15.0 per cent decline played out in the rest of the region.

Construction Industry Employment

Period Vancouver Island and

Coast

Victoria Metropolitan

Area

Vancouver Island

excluding Victoria

(Persons – thousands) Q1-2020 35.2 17.9 17.3 Q2-2020 33.4 17.8 15.6 % change -5.1 -0.6 -9.8 Q2-2019 36.1 16.4 19.7 Q2-2020 33.4 17.8 15.6 % change -7.5 8.5 -20.8

Q1-Q2 2019 35.5 16.2 19.4 Q1-Q2 2020 34.3 17.9 16.5

% change -3.5 10.2 -15.0 Source: Statistics Canada, VICA. Note: 3-month average at end of quarter. Averages for year-to-date. Components may not add due to rounding.



Outlook

In the second quarter, Vancouver Island’s construction sector stalled as a result of the COVID-19 pandemic, which will continue to play an important role in the region’s economy and construction industry. Consequently, the outlook is uncertain.

Record low interest and mortgage rates are positive for the residential sector and investment spending. But, investment in commercial and industrial buildings looks to remain low until there is more clarity about future demand. Work from home, online shopping, and distancing measures have reduced demand in the short-term, and likely in the longer term, which is causing uncertainty for investors.

The residential sector has seen a strong rebound in housing sales since the pandemic lows. Attractive mortgage rates suggest the housing market will hold up well and probably post gains as long as the economy does not fall into another recession due to a second virus wave.

Increased public building activity is possible and provides the government with an opportunity to help the economy during these difficult times.

Forecasting under highly uncertain conditions is best approached with scenarios. If the pandemic’s second wave in the fall and winter is limited, consumer confidence will gradually improve resulting in an upswing in the economy and more construction activity. Total building permits could post a small gain in 2020 and a larger gain in 2021. However, if a second wave occurs or pandemic restrictions extend well into next year, construction activity will likely remain low or contract this year and possibly next year.

Arrange an interview with VICA CEO Rory Kulmala:

Owen O’Rourke, Communications Coordinator Vancouver Island Construction Association 250.800.1722 | [email protected]


mailto:[email protected]



Building Permits Issued – Vancouver Island -Coast

Period Total

Permits

Non-Residential Permits Residential Permits

Total Industrial Commercial Inst.-Govt. Value Units

(Dollars – Thousands)

Jan-Mar-20 $591,822 $158,458 $12,004 $64,467 $81,987 $433,364 1,714 Apr-Jun-20 $506,586 $72,245 $8,696 $40,716 $22,833 $434,341 1,355 % change -14 -54 -28 -37 -72 0 -21 Apr-Jun-19 $646,436 $131,526 $18,493 $86,423 $26,610 $514,910 1,926 Apr-Jun-20 $506,586 $72,245 $8,696 $40,716 $22,833 $434,341 1,355 % change -22 -45 -53 -53 -14 -16 -30 Jan-Jun-20 $1,256,420 $307,873 $50,522 $172,627 $84,724 $948,547 3,639 Jan-Jun-20 $1,098,408 $230,703 $20,700 $105,183 $104,820 $867,705 3,069 % change -13 -25 -59 -39 24 -9 -16 Source: Statistics Canada, VICA.

Building Permits Issued – Alberni-Clayoquot Regional District

Period Total

Permits




Jan-Mar-20 $10,254 $2,698 $1,814 $875 $9 $7,556 22 Apr-Jun-20 $13,426 $3,085 $1,869 $1,215 $1 $10,341 26 % change 31 14 3 39 -89 37 18 Apr-Jun-19 $16,551 $8,227 $330 $7,797 $100 $8,324 26 Apr-Jun-20 $13,426 $0 $1,869 $1,215 $1 $10,341 26 % change -19 -100 466 -84 -99 24 0 Jan-Jun-19 $26,812 $10,355 $500 $9,705 $150 $16,457 60 Jan-Jun-20 $23,680 $5,783 $3,683 $2,090 $10 $17,897 48 % change -12 -44 637 -78 -93 9 -20 Source: Statistics Canada, VICA. ## - greater than 1,000 per cent.



Building Permits Issued – Capital Regional District

Period Total

Permits Non-Residential Permits Residential Permits



Jan-Mar-20 $356,081 $69,235 $8,840 $40,539 $19,856 $286,846 1,240

Apr-Jun-20 $261,522 $34,829 $4,523 $25,321 $4,985 $226,693 655

% change -27 -50 -49 -38 -75 -21 -47

Apr-Jun-19 $260,079 $64,932 $11,261 $46,566 $7,105 $195,147 620

Apr-Jun-20 $261,522 $0 $4,523 $25,321 $4,985 $226,693 655

% change 1 -100 -60 -46 -30 16 6

Jan-Jun-19 $561,445 $135,415 $27,876 $76,147 $31,392 $426,030 1,482

Jan-Jun-20 $617,603 $104,064 $13,363 $65,860 $24,841 $513,539 1,895

% change 10 -23 -52 -14 -21 21 28

Source: Statistics Canada, VICA.

Building Permits Issued – Comox Valley Regional District

Period Total

Permits




Jan-Mar-20 $93,429 $66,598 $478 $4,620 $61,500 $26,831 94 Apr-Jun-20 $32,487 $3,340 $30 $2,998 $312 $29,147 82 % change -65 -95 -94 -35 -99 9 -13 Apr-Jun-19 $45,864 $5,484 $375 $3,105 $2,004 $40,380 144 Apr-Jun-20 $32,487 $0 $30 $2,998 $312 $29,147 82 % change -29 -100 -92 -3 -84 -28 -43 Jan-Jun-19 $93,845 $7,812 $826 $4,807 $2,179 $86,033 334 Jan-Jun-20 $125,916 $69,938 $508 $7,618 $61,812 $55,978 176 % change 34 795 -38 58 ## -35 -47 Source: Statistics Canada, VICA. ## greater than 1,000 per cent



Building Permits Issued – Cowichan Valley Regional District

Period Total

Permits




Jan-Mar-20 $34,358 $9,703 $579 $9,019 $105 $24,655 109 Apr-Jun-20 $38,286 $5,807 $1,078 $4,723 $6 $32,479 99 % change 11 -40 86 -48 -94 32 -9 Apr-Jun-19 $40,369 $4,078 $1,357 $2,155 $566 $36,291 137 Apr-Jun-20 $38,286 $0 $1,078 $4,723 $6 $32,479 99 % change -5 -100 -21 119 -99 -11 -28 Jan-Jun-19 $91,688 $33,020 $3,421 $3,983 $25,616 $58,668 218 Jan-Jun-20 $72,644 $15,510 $1,657 $13,742 $111 $57,134 208 % change -21 -53 -52 245 -100 -3 -5 Source: Statistics Canada, VICA.

Building Permits Issued – Mount Waddington Regional District

Period Total

Permits Non-Residential Permits Residential

Permits Total Industrial Commercial Inst.-Govt. Value Units


Jan-Mar-20 $607 $505 $20 $460 $25 $102 0 Apr-Jun-20 $718 $189 $6 $183 $0 $529 1 % change 18 -63 -70 -60 -100 421 - Apr-Jun-19 $2,809 $1,451 $100 $1,351 $0 $1,358 4 Apr-Jun-20 $718 $0 $6 $183 $0 $529 1 % change -74 -100 -94 -86 - -61 -75 Jan-Jun-19 $4,205 $2,511 $1,026 $1,485 $0 $1,694 6 Jan-Jun-20 $1,325 $694 $26 $643 $25 $631 1 % change -68 -72 -97 -57 - -63 -83 Source: Statistics Canada, VICA.



Building Permits Issued – Powell River Regional District

Period Total

Permits




Jan-Mar-20 $3,569 $60 $0 $60 $0 $3,509 12 Apr-Jun-20 $3,676 $7 $0 $7 $0 $3,669 8 % change 3 -88 - -88 - 5 -33 Apr-Jun-19 $7,564 $409 $0 $154 $255 $7,155 62 Apr-Jun-20 $3,676 $0 $0 $7 $0 $3,669 8 % change -51 -100 - -95 -100 -49 -87 Jan-Jun-19 $13,458 $845 $220 $370 $255 $12,613 103 Jan-Jun-20 $7,245 $67 $0 $67 $0 $7,178 20 % change -46 -92 -100 -82 -100 -43 -81 Source: Statistics Canada, VICA

Building Permits Issued – Nanaimo Regional District

Period Total

Permits




Jan-Mar-20 $75,076 $7,136 $20 $6,624 $492 $67,940 198 Apr-Jun-20 $131,984 $22,062 $1,058 $6,226 $14,778 $109,922 432 % change 76 209 ## -6 ## 62 118 Apr-Jun-19 $244,189 $43,005 $4,082 $23,845 $15,078 $201,184 847 Apr-Jun-20 $131,984 $0 $1,058 $6,226 $14,778 $109,922 432 % change -46 -100 -74 -74 -2 -45 -49 Jan-Jun-19 $404,814 $100,066 $5,452 $73,535 $21,079 $304,748 1,296 Jan-Jun-20 $207,060 $29,198 $1,078 $12,850 $15,270 $177,862 630 % change -49 -71 -80 -83 -28 -42 -51 Source: Statistics Canada, VICA ## greater than 1,000 per cent



Building Permits Issued - Strathcona Regional District

Period Total

Permits




Jan-Mar-20 $18,449 $2,523 $253 $2,270 $0 $15,926 39 Apr-Jun-20 $24,487 $2,926 $132 $43 $2,751 $21,561 52 % change 33 16 -48 -98 - 35 33 Apr-Jun-19 $29,011 $3,940 $988 $1,450 $1,502 $25,071 86 Apr-Jun-20 $24,487 $0 $132 $43 $2,751 $21,561 52 % change -16 -100 -87 -97 83 -14 -40 Jan-Jun-19 $60,153 $17,849 $11,201 $2,595 $4,053 $42,304 140 Jan-Jun-20 $42,935 $5,449 $385 $2,313 $2,751 $37,486 91 % change -29 -69 -97 -11 -32 -11 -35 Source: Statistics Canada, VICA.


vancouver island construction reportfor q2 2020 report 2020 q2 8.12.2020...vancouver island...

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