Toronto is still the King of North American real estate development. The Rider Levett Bucknall (RLB) Crane Index shows Toronto had 120 active construction cranes in July. Toronto not only tops the list for the most real estate development in North America. It also has more than twice the number of active construction cranes than the next city on the list.
Crane Counts and The Business Cycle
Why crane counts? The number of high rise projects are a major component of the business cycle. When development is booming, so is the economy. A strong economy helps to drive necessary components of real estate growth. That is, there’s cash for more employment, offices, and retail spaces need to be created. All of these people need a place to live, producing more residential real estate. The reverse happens when it begins to slow down. The application of real estate to the business cycle is so common, RLB even gives cycle estimates.
Source: Rider Levett Bucknall. Better Dwelling.
The cycle is broken down in to growth and decline periods, each with three phases – peak, mid, and trough. Peak is when things are the highest, also called the top of the cycle. Mid is when project numbers are firmly starting to rise in the growth, and drop in the decline. Trough is when there’s minimal activity, and the market has bottomed. How long it spends in each one of these phases is dependent on how inefficient the market has become. Got it?
Toronto High-Rise Development Tops The List Again
Toronto real estate development topped the list again, even toppling its own record. There were 120 cranes deployed for real estate development, up 16 cranes from January. This is an increase of 23 cranes from last year’s eye-popping numbers. RLB analysts note most development is outside of the city core. The projects are split between residential and mixed-use. The city now has more than twice the number of high-rise cranes as the next city on the list.
North American Real Estate Development Cranes
The number of cranes actively used for real estate development, according to the RLB Crane Index.
Source: RLB, Better Dwelling.
Even though there’s a lot of projects in the pipeline, things may cool down soon. Toronto is forecasted to be in the mid-decline phase for single-family development. Multi-family development, a.k.a. apartments, are now at peak growth.
Seattle Sees Fewer Cranes, While Los Angeles Ramps Up
In a distant second for crane count are Seattle and Los Angeles. Both cities had 49 cranes in July, but are heading in opposite directions. Seattle has 16 fewer cranes than they did last year. Both low-rise and multi-family are at peak growth in Seattle.
Los Angeles on the other hand has seen things pick up. The 49 cranes in July are 13 more than seen during the same period last year. The city has an estimate of peak decline for both low rise and multi-family residential development.
Calgary Cranes Jump Due To Condo Development
Calgary, the only other Canadian city tracked by the firm, is seeing a rise in the number of cranes. There were 34 cranes deployed at development sites in July, up 8 from the same time last year. The firm noted high-rise multi-family projects are a major contributor to the climb. Separately, the RLB has houses in mid-growth, approaching peak development. It also labeled apartments in mid-cycle decline, which logically hits the trough next. This would see the region enter a period of low growth.
New York City Sees Cranes Jump, But Enters Peak Decline
New York City, often used as a leading indicator for the cycle, had a jump in cranes. There were 27 cranes in July, up 7 compared to the same month last year. Houses are forecasted to be in the mid-decline phase. Apartments have entered the peak decline phase.
Earlier this year RLB analysts forecasted a global slowdown in real estate development. Slowing growth of the global economy was the biggest reason cited. Tighter credit conditions and trade tensions also weigh on growth.
Like this post? Like us on Facebook for the next one in your feed.