Yesterday, the building permit data came out which is one(of many) data points that can provide insight into the real estate industry but more largely the Canadian economy. Here is a quick summary:

• Building Permits Surge in October 2023: Total value increases by 2.3% to $11.2 billion, driven by gains in the non-residential sector.
• Non-Residential Sector Leads Growth: Non-residential permits rise by 5.3% to $4.1 billion, with Ontario taking the lead. Institutional projects, particularly a new hospital wing in Toronto, contribute significantly.
• Commercial Challenges and Residential Resilience: Commercial permits decline for the second consecutive month, down 10.5%. Residential permits edge up by 0.6% to $7.1 billion, with notable gains in Ontario, Alberta, and Quebec, reflecting a resilient housing market.

Here is how the building permits movement looks across Canada as well as broken down between single-family & multi-family:

In October 2023, Canada experienced a notable surge in building permits, marking a 2.3% increase to a total value of $11.2 billion. This rise, spearheaded by the non-residential sector, illuminates intriguing shifts in the construction landscape, presenting a comprehensive view of the nation’s real estate scenario.

Non-Residential Sector Takes Center Stage: The heart of this growth lies in the non-residential sector, which witnessed an impressive 5.3% increase, reaching $4.1 billion. Ontario emerged as the primary driver, with a substantial 16.0% surge. The standout feature was the surge in institutional projects, particularly marked by a noteworthy 29.2% increase in construction intentions, amounting to $1.4 billion. A standout project was the issuance of a permit for the construction of a new hospital wing in Toronto, underscoring the sector’s robustness.

Commercial Component Faces Challenges: While the non-residential sector flourished, the commercial component faced headwinds, posting its second consecutive monthly decline at 10.5%. The decline in October marks a continuation of the downward trend since the record high of $2.9 billion in March. On a year-over-year basis, the commercial sector’s permit values in October were 11.9% less than those issued in the same month in 2022. These challenges point to a shifting landscape in the commercial real estate sphere.

Residential Sector Shows Resilience: On the residential front, the total monthly value of building permits experienced a modest 0.6% increase, totaling $7.1 billion. Gains were observed in Ontario (+7.4% or +$199.9 million), Alberta (+14.8% or +$125.5 million), and Quebec (+7.0% or +$89.0 million). This upswing offset declines in the remaining seven provinces. Year-over-year, residential construction intentions witnessed a robust 16.1% increase in October compared to the same month in 2022, signaling a resilient housing market.

Diverse Housing Landscape: Within this surge, the authorization of 18,100 new dwellings in multi-unit buildings and 4,600 new single-family dwellings across Canada underscores the diversity of the housing market’s response to the changing landscape. This diversity adds layers to the narrative, indicating not only growth but also a varied pattern of housing development.

In conclusion, Canada’s building permit landscape in October 2023 tells a multifaceted story of growth, challenges, and resilience. The surge in non-residential projects, coupled with struggles in the commercial sector, paints a nuanced picture of the nation’s real estate dynamics.