Office construction boom drives record profits this year



    OTTAWA, Aug. 23 /CNW Telbec/ - After more than three years of growth,
profits in Canada's non-residential construction industry are expected to peak
at $2 billion in 2007, according to the Conference Board's Canadian Industrial
Outlook: Canada's Non-Residential Construction Industry - Summer 2007.
    "Construction of office buildings, especially in Alberta and Ontario, is
the main reason for the record financial performance in recent years," said
Valerie Poulin, Economist. "However, rising material and labour costs are
starting to trim builders' profit margins. Since labour accounts for a third
of all costs, the tight labour market is of particular concern for the
industry."
    Solid economic growth is pushing office vacancy rates down and spurring
construction activity, leading to record price increases last year and this
year. Both revenues and costs rose by more than 20 per cent in 2006, and are
forecast to increase by more than 10 per cent this year. In 2007, revenues
will again rise faster than costs, as they have for the past two years.
    Growth in demand for new construction is forecast to ease slightly in the
next two years. Meanwhile, labour and material costs will increase faster than
revenues beginning in 2008. Profit levels are expected to fall every year
through 2011, but they will still be considered high by historical standards.
As it is too early to assess the impact of the sub-prime mortgage crisis on
the overall economy, the current uncertainty is not included in the outlook
for Canada's non-residential construction industry.
    The outlook examines commercial, institutional and industrial
construction segments. It is the first release of the Conference Board's new
Canadian Industrial Outlook: Canada's Non-Residential Construction Industry.
Published twice a year, the content for this report was previously included in
the Board's broader construction industry report.




For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, corpcomm@conferenceboard.ca


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