Drop in construction starts in Kelowna can’t just be blamed on COVID-19
by Rob Munro
The value of building permits issued by the City of Kelowna during COVID-19 is at the lowest level in the last five years.
But a report going to city council on Monday only puts part of the blame on COVID-19 for the slow down in construction.
A major factor has been charges to developers and a busy year in 2019.
In the first quarter of the year – essentially before the COVID-19 lockdown started in mid-March – there was a 50 per cent drop in the value of building permits issued at $90 million.
“This is in comparison to 2019 where Building Permits for several very large Commercial, Industrial and Multi-Family projects were permitted,” the report states.
In the second quarter, when the COVID-19 lockdown was at its peak, there were $139 million in building permits issued. While that’s far below the $340 million issued for the same period last year and lower than any of the previous four years, it’s close to the 10-year average for that quarter.
“The relative strength of this number despite the impacts of COVID19 combined with a strong summer real estate market mean that gross construction value is likely to continue the bounce back for the remainder of this year,” the report states.
It’s predicting more construction starts in the fall as builders try to get work started before higher development cost charges kick in next February.
The number of applications for new developments is also down dramatically in the second quarter of this year.
There were 155 such applications from April through June this year, down from 231 last year and the lowest level since 2013.
Again, that’s not necessarily because of COVID-19.
For one thing, there was a record number of applications filed in the early part of this year as developers rushed to avoid a new $7,000 per housing unit charge to help pay for the construction of new parks.
In the end, the number of applications for new development for the first half of the year, at 374, is only eight less than last year.