Fredericton Sees A Sharp Rise In Demand For Residential Building Construction
FREDERICTON – Numbers provided by Fredericton’s Economic Vitality Committee show high residential development with lower commercial development in 2020 in the face of the pandemic.
The total value of construction over 2020 was $158.5-million, well over the ten-year average of $117-million.
The value of residential construction stood at $96.4-million in 2020, a dramatic increase from 2019, where the value was $54.8-million. It’s also well above the ten-year average of $58-million per year.
“The demand for housing is very high,” said Councillor Bruce Grandy, chair of the Economic Vitality Committee. “We have immigration into the city of approximately 1,500 to 2,000 people a year, so our population is growing.”
2020 saw a large number of multiple-unit buildings start construction compared to past years. 555 total units were started compared to a 10-year average of 317 units/year.
Single detached dwellings saw a figure consistent with the 10-year average at 86 units beginning construction, slightly above the 10-year average of 83 units/year.
“There’s not a lot of those big subdivisions [in development] anymore, more people want to live in a more compressed area, in the vibrancy of the city,” said Grandy. “A lot of people want to be able to walk to the grocery store and they want to be able to get to doctors and they want to do their shopping more locally than they do out in the periphery of the city.”
“When you look at multi-units, that’s what’s being built in these growth areas, while single-family detached are being built in the periphery of those growth areas. The demand for apartments, condos and the like are very high right now.”
The average permit value, which is the estimation of the construction value of a property, reached a 10-year high of $258,059 in 2020. Grandy was pleasantly surprised by this number, particularly with the pandemic’s potential to impact the results.
“I think what you’re seeing is that even with Covid, people still have to have a place to live, people are still coming to our city and people like the idea of living in Fredericton,” said Grandy. “We have a lot of confidence in our developers who are putting these buildings in and spending millions of millions of dollars putting these multi-residential buildings in.”
Grandy says the construction of multi-residential units will help lower rent costs in the longterm as it will increase the city’s vacancy rate, which currently sits at 2.5 percent according to the Canada Mortgage and Housing Corporation.
“We need this construction because one of the problems in Fredericton right now is that rent is skyrocketing,” said Grandy. “In order to have some rent adjustment, you have to have competition and in order to have competition, you need to have a decent vacancy rate.”
Commercial Development Matches 10-Year Low
On the commercial side, Fredericton saw a deep decline in construction with a $17-million valuation, from $76-million in 2019. Prior to 2019, the 10-year high for commercial construction was $35-million in 2018.
A reason for this steep decline comes from the high value of 2019 construction. An unusually high amount of big projects began construction in 2019 such as the Cyber Centre and the new commercial building at 140 Carleton. Due to such a high development year, a slower year was expected in 2020.
“They’re big commercial permits that were undertaken over the last year so that’s why in 2019, that was so prevalent,” said Grandy. “As they wind up, then you start to see residential start to be more prevalent than commercial.”
However, the value of commercial property construction still hit the lowest in 10 years, tied with 2015. Grandy says this is not unusual in the cycle of development in the city.
“You have cycles where commercial is a lot more prominent in the building permits than housing is and then you have a couple of years will go where housing is more prevalent than commercial and it goes in ebbs and flows,” said Grandy.
Grandy also says that it will take a number of years to see the impact the pandemic will have on commercial space, but it is something he is considering in regards to development.
“Commercial space may not be in as big a demand as we think it will be based on the fact that a lot of those companies might not come back to those commercial properties,” he said. “So there may have to be a relook at how we do commercial properties and work with developers on a plan going forward on how that might look.”
Overall, Grandy is pleased with 2020’s development activity and looks forward to seeing how those trends continue in the coming years.
“I think Fredericton’s on the right path forward,” said Grandy. “I look forward to this year. I think we started January very, very well and I’m looking forward to seeing what the coming months will bring.”
Liam Floyd is a reporter for Huddle. Send him story suggestions: [email protected].