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Q2 2016 Canadian Commercial Snapshot

Every quarter CREA’s Real Estate Market Analysts publish key economic indicators for commercial real estate. Stay up to date on economic trends impacting the commercial industry by reviewing the Summer 2016 Commercial Snapshot Report, highlighting changes in Non-Residential Building Permits, Unemployment Rates, Housing Starts, and GDP.

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Here is CREA’s Analyst’s take on the different economic indicators found in the report:


  • Non-Residential Building Permits:

    The value of commercial building permits was down 15.6% to $1.2 billion in May, a third consecutive monthly decline. The drop was largely the result of lower construction intentions for office buildings, recreational facilities and distribution warehouses. Decreases were reported in five provinces, led by Quebec, Ontario and Manitoba.

    In the industrial component, the value of permits edged up 0.6% to $384 million, after posting a 7.8% decline the previous month. The advance was attributable to higher construction intentions for manufacturing plants. Gains were reported in six provinces, led by Ontario and Quebec.

    The value of institutional building permits was up 20.3% to $842 million, a second consecutive monthly advance. Higher construction intentions for medical facilities led the increase. The largest gain was recorded in the Northwest Territories, followed by Ontario and Quebec.

  • Unemployment Rate:

    Employment was little changed in May (+14,000 or +0.1%). With fewer people searching for work, the unemployment rate declined 0.2 percentage points to 6.9%, the lowest rate since July 2015.

    Full-time employment rose by 61,000 in May. This increase was largely offset by a decline of 47,000 in part-time work.

    In the 12 months to May, employment increased by 109,000 or 0.6%, the result of gains in full-time work. Over the same period, the number of hours worked grew by 0.8%.

    In May, employment increased for both men and women aged 55 and older, while it fell for youths aged 15 to 24. There was little change among the other demographic groups.

    Provincially, employment rose in Quebec, Ontario, Manitoba and Prince Edward Island, while it decreased in Alberta and Nova Scotia.

    There were more people employed in the “other services” industry; public administration; construction; business, building and other support services; educational services; and manufacturing. These gains were partly offset by declines in wholesale and retail trade; health care and social assistance; and natural resources.

    The number of public sector employees increased in May, while there was little change among private sector employees and the self-employed.

    Adjusted to US concepts, the unemployment rate in Canada was 5.9% in May, compared with 4.7% in the United States.

  • Housing Starts:

    “Overall, June saw housing starts pick up pace in Canada, bolstered by apartment construction in Ontario – especially new condo construction in Toronto’s downtown core,” said Bob Dugan, CMHC Chief Economist. “However, elsewhere in the country, construction activity slowed as apartment construction eased in Quebec. Housing starts are also trending down in Alberta as a result of high inventories in the new and existing home markets of that province.”

    The standalone monthly Seasonally Adjusted Annual Rates (SAAR) for all areas in Canada was 218,333 units in June, up from 186,709 units in May. The SAAR of urban starts increased by 18.1 per cent in June to 202,702 units. Multiple urban starts increased by 26.7 per cent to 142,819 units in June and the single-detached urban starts increased by 1.7 per cent to 59,883 units.

    In June, the seasonally adjusted annual rate of urban starts increased in British Columbia, Ontario, and in the Prairies, but decreased in Atlantic Canada, and Québec.

    Rural starts were estimated at a seasonally adjusted annual rate of 15,631 units.


  • GDP Growth:

    Real gross domestic product (GDP) grew 0.6% in the first quarter, following an increase of 0.1% in the fourth quarter of 2015.

    Exports were the largest contributor to real GDP growth in the first quarter, up 1.7% following a 0.4% decline in the previous quarter. The volume of exports of goods increased 1.9%, while that of services advanced 0.7%. Imports were up 0.3%.

    Final domestic demand was up 0.3%, after edging down 0.1% in the previous quarter.

    Business non-residential investment fell 2.5%, the fifth consecutive quarterly decline, driven by lower investment in engineering structures (-4.3%).

    Housing investment was up 2.7% in the first quarter, with increases in new home construction, renovations and resale activity. Household final consumption expenditure rose 0.6%, with increased outlays on goods (+1.1%) and services (+0.2%).

    Businesses drew down inventories by a further $7.0 billion, after a $5.6 billion withdrawal in the previous quarter. The stock-to-sales ratio edged down.

    Government final consumption expenditure increased 0.4% in the first quarter.

    Expressed at an annualized rate, real GDP rose 2.4% in the first quarter. By comparison, real GDP in the United States grew 0.8%.

With all the changes that have been happening in the economy in the past few years both nationally and locally, you may be wondering what your commercial property is worth. If so, contact me today for a free market analysis.

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