Development Activity Reaches Multi-Year Low;
Potential Uptick in the Second Half of the Year
Construction slows, but inflection point could be near. In April, the total value of building permits issued fell 19 per cent monthly as elevated financing, labour and material costs continued to hinder development intentions. Following a record high in March, the total value of non-residential permits fell 35 per cent monthly in April, mainly driven by a 50 per cent drop in industrial construction activity. This significantly lower industrial permitting was mainly attributed to exceptionally high volumes of large-scale projects in March. Consequently, the long-term trend remains positive as developers look to keep pace with still healthy industrial-related space demand. In the residential sector, permitting activity fell for the second consecutive month, down 6 per cent monthly. With borrowing costs and home prices showing signs of stabilizing, residential development activity may be nearing its trough.