PROJECTED PROJECTS

Calgary leads jump in building permit values
South Health Campus fattens value in May
By Lisa Schmidt

Calgary Herald

With Files From Canwest News Service

July 8, 2009

Calgary led a surge in building permits across the country, with the value doubling in May, Statistics Canada reported Tuesday.

But the pace still lags 2008 levels, with the value of construction projects at $1.5 billion, down about one-third from the same time last year.

Construction permits worth $626 million were issued in Calgary in May, twice the amount handed out in April.

Most of the increase came from institutional and commercial permits, as the value of non-residential applications jumped fivefold. That was due in most part to the South Health Campus, with permits totalling about $388 million.

"We got a huge boost from that hospital," said Lai Sing Louie, market analyst with Canadian Mortgage and Housing Corp.

The value of residential permits fell about 40 per cent to $101 million, largely due to a virtual standstill in condominium construction.

"There were 58 in May taken out -- it wasn't a lot in terms of units overall," said Louie.

In Alberta, the value of construction permits jumped nearly 50 per cent to $1.1 billion in May. So far this year, permits are down more than 40 per cent to $3.6 billion.

The monthly gain in building permits is encouraging, said one economist, suggesting this echoes other signs the worst of the recession may have passed.

"However, the good news should be tempered with a liberal dose of caution," Todd Hirsch, senior economist with ATB Financial, said in a release.

All of the gains were concentrated in a few large projects in Calgary, he noted.

"Since it is just one month's worth of permits, it's hard to argue that this is the beginning of a trend. Outside of Calgary, building permits remain rather weak, particularly for residential construction."

Across Canada, the number of building permits issued in Canadian municipalities "soared" in May, but economists warned the flurry of activity won't last.

Statistics Canada said the value of building permits issued in May surpassed the $5-billion mark for the first time since October.

That represents a "whopping" 14.8 per cent hike over April, according to Charmaine Buskas, senior economics strategist with TD Securities.

"This report is at odds with expectations, but can be mostly explained by the massive increases in two main sub-components--multi-family units and institutional permits," Buskas said Monday. "Clearly, builders were not scared off by the weak macroeconomic backdrop, and in fact were helped by government spending."

However, she also cautioned, "This pace of rising activity is unlikely to continue."

Municipalities approved 13,087 new dwellings in May, an increase of 22.1 per cent.

Statistics Canada says that reflects a 40.5 per cent increase, or 7,948 multi-family units. The number of single-family units approved rose 1.5 per cent to 5,139.

"All provinces, except for Nova Scotia, reported increases in multifamily construction intentions," Statistics Canada said. "Intentions nearly doubled in Ontario compared with April."

It's the third consecutive month of increases in the value of permits in the residential sector.

Residential building intentions rose 14.4 per cent to $2.6 billion.

In the non-residential sector, the value of permits rose 15.3 per cent to $2.4 billion following a 12.9 per cent decrease in April.

The building permits survey covers 2,400 municipalities representing 95 per cent of the population and provides an early indication of projected building activity.