Western economy fuels construction boom

Canada's construction industry kept right on rolling through May, reaching the third-highest level of building permits on record.

Canada's construction industry continued to defy the pundits in May, as builders rode the western economic boom andjust kept on building.

In its latest monthly report on building permits, released Thursday, Statistics Canada said the value of building permits reached $5.4 billion in May, up 6.9 per cent from the previous month.

The western boom continues. Oxford Properties Group announced Thursday that it is planning to build a new 40-storey office tower in downtown Calgary's Eau Claire district.

"Calgary has proven itself to be an exceptional market for commercial real estate with today's low vacancy rates and high demand, and many organizations currently looking for new space," said Michael Latimer, Oxford's president and chief executive officer.

May's level was the third highest on record, surpassed only by December 2005 and March 2006 when abnormally warm weather allowed construction crews to start work earlier than expected.

It was 6.3 per cent higher than last year's monthly average. And it was the sixth straight month that the value of the permits has passed the $5-billion mark.

Statistics Canada attributed the construction boom to the dynamic economy in Western Canada, as well as a strong job market and strong demand for consumer goods.

Non-residential sector leads

The construction boom in May was led by thenon-residential sector — industrial, commercial and institutional buildings — which took out $2.1 billion in permits, up 18.1 per cent from the month before.

All three components of the non-residential sector did well in May.

Commercial buildings — hotels, trades and services — rose by nearly 10 per cent, the third increase in four months, to the highest level since August 1989.

Industrial construction rose 26.3 per cent, as companies built factories and utilities.

Institutional construction increased by 34.7 per cent in May, as Canadians demanded more schools and hospitals.

The housing sector was lacklustre by comparison.

Permits for apartments and condominiums rose by 3.8 per cent in May, the third increase in four months, while single-family homes fell by one per cent, the fourth drop in four months.