Canadian real estate development is on fire, only when it comes to homebuilding. Statistics Canada (Stat Can) building permit data shows a record value hit in March. Virtually all gains were due to residential building permits though. Commercial permits fell significantly though, as the pandemic weighs on business investment.
Canadian Building Permits Reached A Record Dollar Value
Canadian building permits have reached a record high after a residential building boom. The value of building permits reached $10.9 billion in March, up 5.7% from the month before. It was the third consecutive month to print a record-setting number. Adjusting for inflation, only April 2019 came in slightly higher. There’s a lot of construction activity coming in the not-so-distant future.
Canadian Building PermitsThe monthly value of building permits across Canada. Source: StatCan; Better Dwelling.
The Vast Majority of Building Permits Are For Housing
The vast majority of building permits are for residential properties. Residential permits represented $8.0 billion of the total in March, 15.9% higher than the month before. The segment represents a whopping 75% of the total value of building permits issued. If compared to pre-pandemic ratios, this is about 19% higher than the median 5-year value.
Canadian Residential Building PermitsThe percent of total building permit value that is for residential building, across Canada. Source: StatCan; Better Dwelling.
The boost for residential is largely due to multi-family building permits around Toronto. Multi-family units represented $4.3 billion of the total, up 24.5% from the month before. The segment is now at an all-time high as well, due to three cities. Stat Can said projects in Toronto, Burlington, and Vaughan were a big contributor to the boost. For those unfamiliar with Greater Toronto, those markets are all so close, they’re on the same real estate board.
Commercial Building Permits Fell Over 14%
Many people are going to be working from home if the amount of commercial building is a sign. Commercial permit values reached $1.5 billion in March, down 14.6% from a month before. Stat Can said this is 25% lower than the average monthly permit value in 2019. The mismatch is odd since residential developments are typically accompanied by commercial ones. All eyes (and resources) are on housing right now.
Canadian building capacity is going almost all-in on housing. The blip in commercial building permits might just be temporary, but it may also not be. Recently a BMO analysis found office vacancies across the country reached a 25 year high. Commercial real estate developers typically form a business case before building. At this time, there’s a lot of uncertainty as to how quickly demand will recover post-pandemic. If it’s almost instant, there’s going to be a lot of commercial buildings to catch up on.
Like this post? Like us on Facebook for the next one in your feed.