Edmonton Construction Permits Plunge 23%

It’s no secret that bad news sells.  So much so that any news that isn’t bad news often gets mocked (that sentence itself might be negative enough that it qualify as “news”).

At your peril, do a search for “Slow News Day” on Twitter.  Or anywhere for that matter.  If the headlines don’t involve car accidents, murders or head coaches getting fired, the default response for many people is to ask the rhetorical “Slow News Day?”.  It isn’t original, or clever, but does speak to the type of news many people expect to read, watch or hear.

Here’s an example.  Amazon is estimating they will bring 25,000 jobs to New York, of which only 1/2 will be in tech.  We have nothing to do with New York or Amazon, but we find that fact interesting.  Barbara, on the other hand, doesn’t even believe it’s news.

So our headline is meant to pander to the Barbara’s of the world.  You wanted bad news Barbara, you got it.  If the headline didn’t get you excited enough, we’ll expand on it a bit: In the third quarter of 2018, construction permits dropped 23% quarter-over-quarter and 19% from Q3 in 2017.  Oooooooh.

If you’re a bad news junkie, we would suggest you stop reading there.  While the following is factual, it might not even constitute “news”.

Negative news might be enticing, but it seldom tells the full story.  Digging in further will reveal that residential permits were primarily responsible for that decline.  Residential permits dropped 35% year-over-year but non-residential permits actually went up 15%.  If we put Commercial & Industrial Permits in Edmonton Increases 15% as the headline, research would suggest you might not even be reading this.

So residential permits are down, and commercial permits are up, but what does that even mean?

Some would say the number is a reliable leading indicator for the economy.   In theory, these numbers can provide information on what will happen in the near future.  This could include a glimpse into consumer and business sentiment, or even provide some data on what can be expected in the construction industry.  Naturally, a number of other industries are also intricately connected, so all things being equal, an increase in building permits should be a positive sign for the economy.  (Or, if you’re still reading hoping for some negative news, a decrease in building permits should be a negative sign for the economy).

Our take?  Oil prices have plunged a few years ago and have slowly started making a recovery (although Canadian oil prices still really suck).  Accordingly, it doesn’t surprise us to see that building permits would have declined over that time.

Judging by the graph, the economy has shown a surprising resiliency in the economic downturn.  To further support that, next week we’ll show how the top 10 real estate sales of 2018 have amounted to nearly $1 billion.  So while there will always be bad news headlines for those out searching for it, sometimes it’s worth digging around for some good news.

 

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”

-Winston Churchill

 

 

 

Our Team

Chad Griffiths

Chad Griffiths

Partner, SIOR, CCIM

Chad is a partner with NAI Commercial Real Estate and focuses on the Greater Edmonton area. Chad entered the industry in 2004 and has completed over 400 commercial transactions with clients ranging from small, local companies to large institutional owners. Chad has been a top 15 producer with NAI Canada-wide since 2013.

Ryan Brown

Ryan Brown

Partner, BCom, SIOR

Ryan is a partner with NAI Commercial Real Estate in Edmonton and is currently ranked nationally as one of NAI's top advisors. Having executed in excess of $100 Million worth of sales transactions and over 2 Million square feet of lease transactions, Ryan has developed a firm understanding of asset evaluation and an aptitude for building design, functionality, and long-term practicality.

Darcie Bouteiller

Darcie Bouteiller

Associate

Darcie is a licensed Commercial Real Estate Agent in the Province of Alberta with a focus on the Edmonton market and its surrounding areas. Darcie accomplishes custom solutions for her clients through her personable nature and results driven attitude. Darcie can help if you are looking to invest in commercial real estate or are looking for representation for a sale or lease transactions.

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