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Non-residential construction slows at the end of ‘17

Non-residential construction slows at the end of ‘17

Posted on: 1/16/2018 | Author: ATB Financial's Economics + Research Team

The sight of construction cranes have dotted Alberta’s horizon for years—and even heading into the recession, non-residential building continued to advance. But by 2017, the pace of activity started to slow down.

In the fourth quarter of last year, the value of total non-residential construction clocked in at $2.4 billion, essentially unchanged from the previous quarter. For the year as a whole, non-residential construction was $10.1 billion. That was the lowest annual level in four years.

But while construction activity was slower last year, it was not as big a drop as one might think given the severity of the recession. It was down from 2015, which was a record high of $11.9 billion. It was also lower than 2016’s total of $10.9 billion but by only eight per cent.

Going into 2018, however, the pace of non-residential construction could slow even more. Commercial building activity—which represents the largest component of non-residential building—will contract the most as both Calgary and Edmonton are experiencing a glut of office space on the market. Both cities are still seeing major commercial projects in the works, and that will limit the size and scope of new projects in the future.

Government and institutional buildings, which are projects such as schools, hospitals and buildings on university campuses, may continue to grow and expand in 2018. Still, at all three levels of government budgets are strained. That may limit the amount of growth in this area as well.

Non-residential construction, graph

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