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Billion-dollar building boom for Windsor’s non-residential sector

The Gordie Howe International Bridge is shown on Monday, January 15, 2024. PHOTO BY DAN JANISSE /Windsor Star

While interest rates and a slowing economy are acting as a drag on most construction activity across the country, the value of building permits for non-residential construction in the Windsor area is at a record high.Local building permit values for non-residential construction more than doubled to $1.06 billion for the 12-month period ending November 2023, compared to the previous year.

The industrial construction segment alone accounted for $779.3 million of that total. The non-residential construction permit value for the previous 12-month period was $449.2 million, a figure that includes commercial and institutional.“We’re an anomaly in the country because of these big projects,” Windsor Construction Association president Jim Lyons said of the Gordie Howe International Bridge and NextStar Energy battery plant construction.

“You’d have to go back to when we were building the casino to find a comparison (in activity).”

But all that mega-project activity is being offset by a deep dip in the value of residential building permits for the same period — $614.1 million compared to $1.12 billion for November 2023 versus November 2022.

According to Statistics Canada data, non-residential permits for the month of November 2023 were $40 million while the total value of residential permits was $35.6 million.

The combined value for all local building permits for the 12-month period ending in November is down 30.6 per cent.

“All of that drop is accounted for by the residential sector,” Lyons said. “There’s not a lot of homes being built because of the interest rates.”

Nationally, residential building permit values fell by 2.2 per cent for the year while non-residential permits dropped 7.6 per cent. In Ontario, residential permits dipped 0.5 per cent and non-residential permits plummeted 33.4 per cent.Windsor-Essex Home Builders’ Association president Brent Klundert said the residential sector is currently experiencing a chill. A lot of builders are looking to move the inventory they have now, he said, and are hoping for an interest rate decline before embarking on more construction.

“We’re not going to start speculatively building for the spring like has been done in the past,” Klundert said.

“This year we have so much inventory available still, we’re not going to add to it.”

In the latest CMHC housing stats for November 2023, the Windsor area saw 86 new starts comprised of 23 single-family homes, 12 semi-detached, 15 row house units and 36 apartments. That’s 36 fewer starts than in October.

For the first 11 months of 2023, new starts are down 429 units compared to the same period in 2022.

The single-family homes that have been constructed won’t qualify as affordable housing either. The average price of the newly-built homes that have been sold in the past three months is nearly $1.1 million.

In November 2023, there were 30 newly built homes sold, but there were 78 others that remained empty. That ratio has been similar each month going back to the summer.“You can see we’re only operating at half our capacity this year compared to the previous year when we pulled over a billion dollars worth of permits,” Klundert said. “That is going to further deplete the local supply and exacerbate the problem.

“Everyone is just waiting for the levee to break and then there’s going to be a rush. There’s a pent-up demand that is continuing to build and the area’s population is continuing to grow.”

Klundert said builders are optimistic that levee will break in 2024 if interest rates remain stable or begin to dip, simply because of the building pressure.

“I expect there’ll be a high demand again for single-family homes as the market begins to move,” Klundert said. “The market has a land inventory for single-family homes.

“You’ll also see a mix with more high-density projects that are in the planning stages now.”

Lyons also expects the good times to continue to roll in 2024 for area contractors in the industrial, commercial and institutional sectors.Much work remains on the mega-projects underway, with new supplier plants, road works and other infrastructure only adding to the list of projects.

“The region is in good shape,” Lyons said.

“As these new jobs arrive soon, we’ll be seeing construction in residential condo/apartments take off too with people moving here.

“I don’t think you’ll see so much of the high-end stuff, but more for mid-price range and first-time buyers.”

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