Falling vacancy rates and rising consumer spending have led to a recovery in building starts
Los Angeles, CA (PRWEB) March 11, 2013
Demand for the Commercial Building Construction industry is ramping back up. The recession decimated demand for industry services, as vacancy rates for retail space escalated. In response, the federal government implemented numerous initiatives in 2010 to assist the industry in a rapid turnaround. “Slow growth in consumer spending and a drop in private investment prompted the federal government to loosen lending standards during the recession, which has since incentivised businesses to increase spending,” says IBISWorld industry analyst Deonta Smith. As a result, building starts have picked up due to falling vacancy rates and rising consumer spending over the past five years. Due to these trends, IBISWorld expects revenue to jump 2.9% to $20.7 billion in the five years to 2013. Aggressive lending into the commercial sector and gains in both employment and disposable income have all prompted increases in demand. Also, a surge in private investment activities is pushing revenue up 6.3% in 2013.
Retail space has emerged as one of the strongest needs for the industry's commercial clients. A number of factors have led to higher demand for commercial building starts. For example, as a result of improved income and lower unemployment levels, consumer spending retained its positive growth, even during the recession years. Over the five years to 2018, revenue is anticipated to continue its upward trend. As demand for construction rises, so will industry employment. The number of employees is also projected to rise. 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 further push up demand.
The Commercial Building Construction industry is estimated to have a low level of concentration, with the three top companies making up less than 20.0% of market share. As of 2013, there is only one industry major player (PCL Constructors Inc.) that competes with regional and local contractors. According to Smith, market share concentration has increased over the past five years, because competitors have consolidated to increase profit margins amid the recession. In addition, falling demand for commercial building starts led to company exits during this period. Although industry concentration is classified as low, the regional concentration is often higher. 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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