Toronto is one of the few real estate markets to buck the trend of fewer high rise cranes. Rider Levett Bucknall Crane Index (RLB), a global real estate advisory firm, released its Q3 Crane Index. The index shows North America saw the first decline of construction cranes in years. Toronto was a notable exception. The city isn’t just seeing more construction cranes, it now represents a third of the index count.
About The Index
The RLB Crane Index is a biannual index published by the development consultancy. It tracks activity in 14 major cities in Canada and the US. The list is not a complete list of all cities, with markets like Vancouver notably absent. However, it is the most comprehensive list that is regularly published.
The Crane Index gives a simplified view of construction workloads in markets. By looking at how busy markets are, we can get a bird’s eye view of demand. Rising crane counts are reflective of higher investment activity, and mean rising costs. Rising costs typically translate to higher consumer prices.
Fewer cranes tend to reflect slowing investment activity, and falling costs. Falling costs typically translate into lower consumer prices. It should be noted that crane activity follows investment activity. In other words, it lags the trend. Instead of using this as a forward indicator, it better serves as confirmation of an investment trend.
Only 4 Real Estate Markets Saw Crane Counts Rise
RLB analysts are noticing the pandemic is having an impact on construction activity. The firm notes this is the first decrease for the Crane Index since July 2017. Four markets experienced an increase from earlier this year. Five markets maintained their level of construction activity. The other five experienced a decline, ranging from 27% to 76% according to the firm.
Toronto’s Real Estate Market Has Almost A Third of Cranes
Toronto real estate has topped the list for a few years now, and it keeps widening the lead. The number of cranes hit 124 in Q3, up from 121 in the first half of the year. There were 120 last year at this time. The firm reports the majority of the cranes are residential projects. This leads them to believe activity should slow in the not so distant future, with new home sales falling 30%. They also add the work from home trend is also likely to also reduce building in the region.
The Next 3 Largest Markets Still Have Fewer Cranes Than Toronto
To appreciate how many cranes Toronto has, you need to see how distant other markets are. Seattle has the second most cranes in the index at 43, up from 36 earlier this year. Los Angeles follows with 41 cranes, down from 47 in Q1. Calgary comes in third with 34, down from 37 in Q1. The second closest market has nearly a third of the cranes as Toronto. All three markets combined still add up to fewer than Toronto as well.
Analysts at RLB expect fewer cranes in most markets across North America soon. The firm is seeing lenders support fewer large, new developments in sectors that have been hard hit. This is likely the hospitality and entertainment industries. This will translate into fewer project launches. The firm is already seeing “more competitive bidding” for projects, indicating slipping demand.
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