But cost increases will stay higher than national inflation rate, consultant says

Marke Andrews
Sun

A strong provincial economy, thriving oil, gas and mining industries and continued population growth will lead to more stable construction costs in British Columbia, a cost-management consultant predicted Friday.

Vancouver-based consultant BTY Group predicts that after construction costs in B.C. rose by 10 per cent in 2007, this year’s cost rise will be seven per cent, followed by six per cent in 2009, five per cent in 2010 and just three per cent in 2011.

However, it should be noted that these rises are compounded, and that both here and in other provinces price increases will remain well ahead of the national inflation rate.

The company also predicts that non-residential construction and housing starts will remain at high levels, and because of stabilizing construction costs, investment in public and private sectors of the construction industry will be strong.

By contrast, projections in other western provinces will remain high because of a high demand for construction. Alberta is predicted to see construction costs rise 18 per cent this year and 15 per cent in 2009, not recording a single-figure rise until 2011, at seven per cent. Saskatchewan‘s cost increase is predicted to hit 13 per cent this year and 10 per cent in 2009, before falling to eight per cent in 2010 and six per cent in 2011.

Ontario is on a similar curve with B.C., with its construction costs rising seven per cent this year, six per cent in 2009, and four per cent both in 2010 and 2011.

One reason for higher construction rates in the western provinces is population growth. Saskatchewan, which experienced population declines for decades, actually grew in 2007, and this is reflected in housing starts.

B.C. had a record year in 2007 for non-residential building construction, totalling $5.9 billion, up 13 per cent from 2006.

Philip Hochstein, president of the Independent Contractors and Businesses Association, said a stabilization of construction costs will be good for both builders and home-buyers.

“My members, the contractors, are in a better position to give estimates with a lot more certainty and with far fewer caveats than in the past,” said Hochstein. “For a consumer, certainty is everything.

“If developers have to build in contingencies for unknown inflation, I think those contingencies will be smaller.”

Neill McGowan, a managing partner with BTY Group, said it’s difficult to say if stable construction prices will mean stable housing prices. Housing prices are affected by many things other than construction cost such as mortgage rates, population and housing demand, he said.

“Prices are a function of cost,” said McGowan. “Developers have to make a profit to make a project a go. They’re paying a lot of money to get projects built, and they keep pushing up their prices. Some of the developments now are selling in the $800 to $900 per square foot range.”

Alberta‘s rates will be pushed upwards by the province’s high number of oil patch projects and Calgary‘s office-building boom, said McGowan.

“We don’t have any major office buildings going in at Vancouver,” he said.

© The Vancouver Sun 2008

 

Sun

The debate over EcoDensity got off to a bad start in Vancouver, but that doesn’t make it a bad plan.

The name became too closely linked to the political future of Mayor Sam Sullivan after he briefly took out a trademark in his own name before turning it over to the city. But more importantly, the controversial brand name has become a lightning rod for fears that developers are going to be given carte blanche to turn peaceful, family oriented neighborhoods into row after row of Soviet-style apartment blocks.

To try to cool some of the rhetoric, some proponents have suggested changing the name of the initiative now under consideration by city council to EcoCity.

That wouldn’t really help. It would simply add confusion and no one would really be fooled. The debate really has to be about density. Like it or not, Vancouver, like the rest of the Lower Mainland, will continue to grow. The question is how.

The central notion behind EcoDensity is sound. Cities embody one of the great opportunities we have to tackle global warming. There are cascading opportunities that flow from replacing growth through energy-intensive suburban sprawl with more compact neighborhoods.

High on the list is getting people out of cars. Commuters can’t leave their cars at home unless they have a viable alternative. That means access to transit. Viable public transit needs riders, the more the better.

It also means zoning that allows people to live close enough to where they work that they can choose to walk or ride a bicycle.

More people also support more amenities, shops, theatres and restaurants, all the things that make great cities great.

And if it is done right, all of this growth can occur without increasing traffic on the roads. We have actually seen a decrease in commuting time in Vancouver over the past decade.

We’ve been reaping the benefits of such growth in Vancouver for the last 30 years as thousands of people have moved downtown. So what this debate is really about is doing it right.

It’s clear that many people who live in the suburban style neighborhoods within Vancouver fear that EcoDensity is a Trojan Horse that will allow developers to destroy their Arcadian existence.

But EcoDensity cannot mean unfettered growth. No developer should be allowed to tear down a single family home in the middle of the block and replace it with an eight-story condominium.

But that same leafy street may be able to accommodate well-designed carriage houses and suites that can significantly increase the stock of affordable rental accommodation in the city without harming the character of the neighborhood.

The arterial roads that run through such neighborhoods can support greater growth without harming the adjoining streets.

In fact, the best opportunity for improving life in such neighborhoods is to enable high-frequency transit within walking distances so people can leave their cars at home.

And one of the most promising ways of paying for rapid transit is to reap the value of significantly increased density around or in some cases over the top of stations.

Even on arterial roads, however, development has to be controlled so that the quality of life for existing residents is enhanced, not destroyed.

That still leaves room for creating new zoning that permits denser developments by right so that builders don’t have to go through an expensive variance for projects that fit within acceptable guidelines.

Does that mean that the concerns of local neighborhoods won’t be heard? Hardly. What it should mean is that those concerns will be heard in the context of the need for growth that enhances life in the city and the Lower Mainland.

© The Vancouver Sun 2008

 

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Third month in a row for Canada; B.C. suffers largest dollar decrease

Sun

The value of building permits in Canada fell unexpectedly for the third straight month in January, with the largest decrease in dollars occurring in B.C., Statistics Canada reported Thursday.

The value of permits issued by B.C. municipalities dropped by 22.4 per cent, to $815 million, the lowest level since April 2006 and a decline of $235 million from December.

The federal agency also reported that the value of B.C. permits in January was down 22.5 per cent from the same month last year, dragged down largely by a sharp drop in permits issued in Metro Vancouver.

Metro Vancouver permits issued in January totalled $427 million in value, a drop of 34.4 per cent compared to the $651 million recorded January 2007.

That drop was large enough to eclipse even a 121-per-cent gain in the Kelowna census metropolitan area, where permits rose to $75 million in January from the $34-million value reported in the same month last year.

In B.C. the percentage drop in non-residential permit values was greater, 51 per cent, than the nine-per-cent drop in residential permits from January to January.

The dollar-value drop in residential permits was $65 million, from $718 million in January 2007, to $653 million in January 2008. In the non-residential sector, the numbers changed from $334 million to $162 million, a difference of $172 million.

But the declines are within normal industry bounds, according to the Vancouver Regional Construction Association.

“We don’t see this as a longer- term trend as the industry is still operating at full capacity,” Keith Sashaw, president of the VRCA, said in a news release. “We will continue to watch the numbers, but we are not hearing concern from our members at this point.”

And Philip Hochstein, president of the Vancouver-based Independent Contractors and Businesses Association, said in a separate release: “We’re coming off a record year in 2007 for building permits, so it’s not surprising to see some declines.

“The building permit numbers reflect an economy that is continuing to grow and do well, but is not at the heated levels of the last few years.”

He added: “The overheated construction market in B.C. has resulted in labour shortages and cost escalation, so a moderation in activity would benefit industry and consumers.”

But nationally, economists had forecast the value of permits, a measure of future construction plans, to climb by one per cent. Instead they dropped 2.9 per cent from December to January, to $5.9 billion.

Ontario reported the largest dollar gain, with municipalities approving $2.4 billion worth of permits, including a 68-per-cent December-January gain in non-residential permits, to $1.4 billion.

Alberta posted a 4.2-per-cent gain to $1.2 billion, while Quebec mirrored Ontario‘s experience, with a 2.7-per-cent decline in residential permits offset by a 14-per -cent advance in non-residential permits. The total value of Quebec permits rose 1.9 per cent in January to $989 million.

Statistics Canada said that despite the declines, building sites would be busy in the first part of 2008 as construction intentions were strong in 2007.

© The Vancouver Sun 2008

 

Wendy Mclellan
Province

B.C. posted the largest dollar decrease in building permits in the country in January, reaching the lowest level since April 2006, and possibly signalling a cooling period in the province’s housing market.

The total value of residential and non-residential permits in B.C. fell 22.4 per cent to $815 million compared to December 2007, with the largest declines in the Vancouver area, according to a Statistics Canada report released yesterday.

While the numbers were down 26.1 per cent to $427 million worth of permits issued in Vancouver during January, Victoria’s total building permit figures increased by 64.1 per cent compared to the previous month. Abbotsford posted gains of 57.4 per cent.

All three B.C. areas declined compared to January 2007.

“Strength in employment, growth in disposable income, [the] dynamic economy in Western Canada and tight apartment-vacancy rates in certain centres are factors that could affect positively the demand for housing,” the report said. “On the other hand, the impact of price increases on housing affordability and the signs of a weakening U.S. economy and their spillover effects in Canada could erode the demand.”

The Vancouver Regional Construction Association responded to the report, saying the declines are “within normal industry bounds” and aren’t cause for concern.

“We don’t see this as a longer-term trend as the industry is still operating at full capacity,” said association president Keith Sashaw.

“We will continue to watch the numbers, but we are not hearing concern from our members at this point.”

Philip Hochstein, president of the Independent Contractors and Businesses Association, also offered a positive face on the figures.

He said B.C.’s overheated construction market has caused labour shortages and cost increases and a slowdown would benefit the industry and consumers.

© The Vancouver Province 2008