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Associations, Economic

Vancouver Island construction activity shows signs of leveling

Russell Hixson
Vancouver Island construction activity shows signs of leveling
CAPITAL REGIONAL DISTRICT - A rendering shows the future Residuals Treatment Facility at Hartland Landfill on Vancouver Island. The $126.8 million project is helping boost the region’s non-residential permit numbers.

The Vancouver Island Construction Association’s (VICA) latest building permit stats, while strong, may be showing the crest of a wave, officials say.

“We have been riding a high wave,” said Rory Kulmala, VICA CEO. “I don’t see it going up significantly anymore. I think the tempo is still high but flattening out.”

According to VICA, building permits shot up 80 per cent in March 2019 over the previous month on the strength of a seasonal surge in residential permits, reaching $106.9 million compared to $59.4 million in February 2019.

Residential permits increased 183 per cent to $93 million in March, and institutional-government permits jumped to $4.4 million with educational and government buildings accounting for most of this activity.

“Compared to last year, total building permits issued were 18 per cent higher with non-residential up 122 per cent and residential up 11 per cent,” reported Rory Kulmala, Chief Executive Officer of the Vancouver Island Construction Association (VICA). “We continue to see strong activity across all segments of our construction industry.”

But the larger picture showed signs of a slowing residential market and a surging non-residential market.

Year-to-date permits issued totaled $284.1 million, a decrease of 16 per cent from the same period last year. Residential permits were 26 per cent lower than in the first quarter of last year while non-residential permits were 45 per cent higher.

“Island stats are interesting in that we are seeing the residential permits certainly being somewhat tempered, but a lot of work is resuming on non-residential projects,” said Kulmala. “Industrial permits are back up, and a lot of that is being driven by the CRD sewage treatment project.”

Kulmala noted that the Island still has strong migration and a low vacancy rate which despite slow permits will continue to drive the market.

“We are not seeing as much as the high end, multi-million-dollar home builds,” said Kulmala. “There is a focus on family-oriented construction and a focus on vertical construction. We have a housing crisis and really the only way to address that is through development. We are limited on land availability, so it becomes a question of vertical construction and a lot of projects on the Island taking that path.”

Kulmala said he is pleased that there is still a lot of activity and that building permits are remaining high but aims to remain vigilant watching economic trends for signs of trouble.

“I’m keeping an eye out for economic trends that lead to the decay of the market or signs we will start to have reduced permits,” said Kulmala. “We have had a quick rise to this point and I think it’s important to watch for economic indications to see what that might turn.”

However, the high wave of activity has been good for the industry, despite an acute labour crunch. Kulmala explained that it has forced the industry to be proactive trying to contain costs.

“We are building smarter and are worker better with our labour force to be efficient and preserve this demand we are having.”


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