Developers and the construction industry are cautiously optimistic as 2010 nears
BY CARLA WILSON, TIMES COLONIST – OCTOBER 17, 2009
The Atrium development at the corner of Yates and Blanshard streets will include B.C. Ferries
and the Land Title and Survey Authority among its office tenants when it opens next year.
Photograph by: Debra Brash, Times Colonist
The seven-storey, $100-million Atrium building rising downtown is significant
to the region, not only for its dramatic design but because it is one of several
major building projects injecting millions into the construction economy in
the wake of a crippling global recession.
But as the Atrium's 200,000 square feet of Class-A office space goes
up, there is caution from Mohan Jawl. His family company is holding back
on starting residential projects and is gauging the extent of the exposure
that government layoffs may have on the office properties they own in the
region.
"I'm not as confident as some people that we are through the worst
of it. I tend to be a little bit pessimistic, or conservative," said
Jawl of Jawl Properties Ltd., owner and developer of more than 20 office,
retail and light industrial buildings in downtown Victoria, Saanich and
at the Selkirk waterfront.
Jawl isn't alone.
Uncertainty and caution remain in the building sector, even as some positive
signs arise.
Strong real-estate sales, including the highest September sales figures
in 17 years, bode well for future housing demand. Workers are also busy
resurrecting the 152-unit Hudson condominium project on Douglas Street,
between Herald and Fisgard streets.
Nationally, housing starts slid in September, but by less than expected
as the market showed signs of recovery. The seasonally adjusted annual
rate of housing starts totalled 150,100 units last month, down from 157,300
units in August.
In Greater Victoria, housing starts climbed in September to 132. That
was higher than the 95 in August and near par with the 139 homes started
during September 2008. Langford, where much of the residential development
is taking place, led the way in September with 40 single-family housing
starts.
Two years ago, builders were faced with soaring costs for supplies and
a shortage of labour as demand surged for new housing in the region. Residential
housing construction boomed. But the flocks of construction cranes that
used to hover over the city are not as common these days. Several projects
stalled as the financial meltdown spooked buyers, confidence slid and financing
became more difficult to obtain.
Although the immediate economic crisis has started to moderate, Jawl
fears that trade and fiscal imbalances remain and that public debt has
been substituted for private debt.
Recently announced provincial cuts may have a "disproportionate effect
on the local economy in a negative way," he said. "A lot of service
providers are going to be affected by that, in addition to the employees
who are gong to be laid off, [and] programs that are going to be cut back."
The provincial government is a major tenant in Jawl Properties' buildings
and cutbacks may leave some properties exposed.
Victoria's office-rental market has been tight because there isn't much
speculative building in that sector, he said. Office buildings go up when
the province or another large agency requests space, and there's always
been a closer connection between demand and new supply.
"You don't find someone going out and building a 10-storey or 20-storey
building just because they think the market will accept it. It's a different
kind of a market, so the supply is more disciplined than it might be in
some of the other centres," Jawl said.
"We're not going to go through anything approaching the bloodbath
that they're going to experience in Calgary, for example, where there is
just a huge amount of supply coming onto the market at a time when demand
is just disappearing."
When the light-filled Atrium is completed by next summer, major tenants
will be B.C. Ferries and the Land Title and Survey Authority of B.C. The
Atrium has a projected completed value of $100 million, Jawl said.
Governments, meanwhile, are backing infrastructure projects to help the
economy. In late September, federal, provincial and local governments announced
$719 million worth of funding in B.C. Local projects include $13.4 million
for a Langford sportsplex, $7.6 million for an Oak Bay low-pressure sewer
system and close to $2 million to upgrade Esquimalt's Archie Browning Sports
Centre.
Sewage treatment is also looming. The Capital Regional District is required
to present a liquid sewage-treatment plan to the province by the end of
the year. A consultant's report shaved the initial estimate down from $1.2
billion to various possibilities, with the lowest at $885 million.
Other major regional construction projects include the $350-million-plus
Royal Jubilee Hospital expansion and the $300-million-plus Uptown redevelopment
of the Town and Country Shopping Centre, projects conceived during boom
times.
The federal government is spending another $266 million in infrastructure
projects through the armed forces, mainly to modernize its fleet maintenance
facility in Esquimalt.
Recent Greater Victoria building permit figures show August's value for
all types of construction reached $71.9 million, up by 68.5 per cent from
$42.7 million in July, Statistics Canada said.
Although residential building tapered off when the economic crisis hit,
forecasters predict a rebound in 2010.
Canada Mortgage and Housing Corp. anticipates that next year will see
1,320 housing starts, up from an expected 930 this year, as a boost in
sales of existing homes fuels demand for more housing.
However, Casey Edge of the Canadian Homebuilders Association's Victoria
office says that extra costs due to the province's harmonized sales tax
will lead to fewer new homes than forecast.
Greg Baynton, president of the Vancouver Island Construction Association,
said builders are cautiously optimistic but the uncertainty "leaves
everybody wondering a little bit."
Currently, the sector is in a slow period, he said, adding that this
could be seasonal or due to worry about the future. Construction association
members generally expect 2010 to be stronger, and that activity will increase
in all sectors. "Projects that maybe were not so viable a year and
a half ago are being dusted off," Baynton said.
© Copyright (c) The Victoria Times Colonist
|
Jawl Properties donated all the food and supplies so that the entire $2,328.31 collected could be sent in for breast cancer research. As well as the yummy, gourmet burgers, supporters of this event enjoyed fresh homemade chocolate chip and oatmeal cookies baked by Jawl Properties staff.
