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VICA report: construction activity recovering

Monday, August 17, 2020

The Vancouver Island Construction Association (VICA) has released their Q2 report on construction activity on Vancouver Island. The pandemic resulted in an industry slowdown in the second quarter of 2020 but increased permits issued each month through to June indicate the worst was over.

The dollar value of building permits on Vancouver Island fell by 14 per cent to $506.6 million in the second quarter of 2020 compared to the first quarter.

Residential permits held steady at $434 million in the first two quarters of 2020, though the number of dwelling units declined 21 per cent from the first quarter. Non-residential permits dropped overall by 54 per cent led by a 72 per cent drop in institutional-government permits and a 37 per cent decline in commercial permits. Industrial permits were down 28 per cent.

“On the positive side, permits did increase during the quarter and Victoria’s residential building construction investment spending surged in May 2020 to $163.49 million following a pandemic-related contraction in April,” said Rory Kulmala, VICA CEO.

Investment spending on non-residential building construction in the Victoria metropolitan area decreased nearly five per cent in May 2020 from the prior month, continuing a declining trend.

Building construction cost increases were higher in residential than in the non-residential sector, and construction industry employment declined across the Island, with the largest decreases outside the Victoria metro area.

“Despite the significant impacts of COVID-19 on our economy, the construction sector has remained active and has demonstrated its resiliency in these uncertain times. We will continue to be a key element towards our economic recovery” said Kulmala.

While record low interest and mortgage rates are positive for the residential sector and investment spending, investment in commercial and industrial buildings looks to remain low until there is more clarity about future demand.

“We expect total building permits could post a small gain in 2020 and a larger one in 2021. However, if a second wave occurs or pandemic restrictions extend well into next year, large surges in construction activity will likely remain low this year and possibly next year,” said Kulmala.


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