DCN ARCHIVES

September 26, 2007

CanaData

Build during boom times, Carrick says

Western Canada should invest in infrastructure now

Alberta’s economic boom because of oil sands activity is a moment in time both the construction industry and governments should grasp, says CanaData’s chief economist.

“In particular for cities like Edmonton and Calgary, they have a window of opportunity here,” says Alex Carrick. “The rest of Canada has to support them in this.”

Carrick delivered a Canadian construction overview recently at the CanaData Construction Industry Forecasts Conference. Edmonton and Calgary rank first and third in Canada for the strongest city labour markets. As of August, 2007, Alberta has the lowest unemployment rate across Canada, at 3.5 per cent and made the biggest employment gains of 4.7 per cent compared to the same time last year.

Alex Carrick

Alex Carrick

“This is a wonderful opportunity and we have to take advantage of this,” says Carrick. “There are a certain number of years to have development put in place.”

Carrick compared the Alberta boom to Venice, Italy and the success it experienced as a primary merchant trading power in the 15th Century. The Italian city on water eventually lost its status but not before benefiting in its development and infrastructure during its heyday.

Canada’s economic growth of 2.5 per cent should continue compared to the United States, currently experiencing a housing and sub-prime mortgage crisis.

“Overall, Canada has enjoyed an economic cycle which is starting to get long in the tooth,” notes Carrick. “Housing has been acting like a drag on the United States economy.”

Housing starts in Canada are at 215,000 for this year with Ontario leading the way with 69,000, followed by Quebec at 49,000, Alberta with 45,000 and British Columbia at 35,000.

Carrick notes changes in service sector employment is helping drive commercial starts and office vacancy rates in Canada. Office-based employment in the professional, scientific and business sectors has grown by four per cent from August 2006 to August 2007. Information and culture based employment grew by three per cent over that time period as well. Carrick forecasts 17.5 million square feet in office building starts for Canada in 2007.

Industrial construction is being pulled by different forces, says Carrick. The decline in the American housing market is affecting Canada’s forestry sector. High commodity prices are driving resource sector investment and Canada’s surplus in crude oil almost equals its surplus in natural gas.

“Everything turns on commodity prices,” he adds.

In 2007, Ontario leads the way in industrial starts with 4.8 million square feet, followed by Quebec 1.6 million and British Columbia at 900,000.

A major influence on institutional construction is Canada’s aging population. As the population gets older, the need for medical facilities is natural, says Carrick. Medical building starts are projected to start at 9.5 million square feet in 2007 and climbing to 13.7 million in 2009.

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