Falling vacancy rates and rising consumer spending have led to a pick up in building starts.
New York, NY (PRWEB) March 01, 2014
Operators in the Commercial Building Construction industry in Canada have experienced strong growth over the past five years. Though vacancy rates for retail and office building space increased in 2009, the industry has since picked up strongly. “The federal government implemented numerous initiatives in 2010 to assist the industry in a rapid turnaround,” according to IBISWorld Industry Analyst Omar Khedr. These contracts include both new-building construction and smaller-scale renovation and repair projects, benefiting both large and small industry operators. In addition, slow growth in consumer spending and a drop in private investment prompted the federal government to loosen lending standards, which urged businesses to increase spending. As a result, falling vacancy rates and rising consumer spending have led to a sharp increase in the number of building starts since 2010.
Unlike in the United States, consumer spending in Canada never contracted. Consequently, industry revenue expanded in 2010 by 8.8% and rose another 7.0% in 2012. Between 2009 and 2012, most industry operators managed to keep healthy profit margins by efficiently subcontracting labor and leasing equipment. Due to these trends, IBISWorld expects revenue to increase at an average annual rate of 5.7% to $37.9 billion in the five years to 2014. “Aggressive lending into the commercial sector, higher corporate profitability and gains in disposable income have prompted increased demand,” says Khedr. Also, a surge in private investment activities is expected to push revenue up by 4.7% in 2014.
Commercial construction typically lags behind the overall economy by one to two years, due in part to the length of construction contracts and the pipeline of projects that general contractors keep on the books. Over the five years to 2019, this pipeline of strong projects is anticipated to allow revenue to continue its upward trend that began in 2010, albeit at a slower rate of an annualized 3.5% to $45.1 billion in 2019. The industry is set to benefit from the increased migration of the population toward metropolitan areas; additionally, stronger sentiment toward green and sustainable construction will push up demand further. As of June 2013, 29 municipalities across Canada have programs in place to promote green and sustainable construction.
For more information, visit IBISWorld’s Commercial Building Construction in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry constructs (i.e. new work, additions, alterations, maintenance and repairs) office, retail, hotel and entertainment buildings. The majority of participants are general contractors or project managers. This industry does not include municipal building construction, which comprises institutional buildings such as schools, hospitals and churches.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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