Canada

Toronto Tops Construction Crane Index, With Almost A Third of All Projects

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.

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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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6 Comments

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  • LT 2 months ago

    Watch the government scramble to open up the borders so foreign buyers come back, but also slam the economy with a rise in cases.

    • SH 2 months ago

      Exactly. The Liberal government will put RE speculators and foreign money launderers ahead of public health.

  • Jamie Cass 2 months ago

    People buy a ton of projects, and try to flip before the next 5% is due. Especially real estate agents. The full 20% isn’t due until occupancy.

    I wonder how many of these projects are funded by foreign buyers hoping to sell before they’re hit with a foreign buyer tax on occupancy?

    • RR 2 months ago

      I’m not sure, but that might be what’s happening in situations like this. If you only put 15% down, and are expected to put another 5% down and 15% foreign buyer, you might consider selling for a smaller loss. Otherwise Vancouver projects haven’t fallen enough for this kind of markdown.

      https://twitter.com/FIVRE604/status/1288709287678599168?s=20

  • Scott 2 months ago

    Hello, Like your crane story, it would be nice to have the number for Vancouver. I would not be surprised if it’s number two in North America

  • SH 2 months ago

    Realtors will scoff that Toronto has had the most cranes for years and it never kept prices in check.

    But the building boom really took off in 2011/12 I believe. So the first group of buildings from the initial flurry of activity would have been completed around 2015 or so – just in time for Trudeau to get elected and explode the immigration rate 40%. So of course the extra supply was easily absorbed, and has been throughout the duration of this Liberal government.

    Until now, that is.

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