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Moderate to strong year predicted for residential construction sector.

The remainder of 1992 is expected to present a mixed bag for Sudbury's construction industry.

It is anticipated that work in the residential sector will remain steady, while commercial projects are expected to be almost non-existent.

Meanwhile, work on the second phase of Inco Ltd.'s sulphur abatement program is likely to provide the bulk of activity in the industrial sector.

Shari Corrigan, a senior analyst with the Canada Mortgage and Housing Corporation (CMHC), says the agency anticipates that single-family home construction will keep pace with 1991's results, while only half as many multiple-unit residences will be constructed.

Corrigan estimates that approximately 600 rental units will be constructed in 1992, down from about 1,100 units last year.

"1991 was an above-average year for rental unit construction," she explains. "There was a low vacancy rate, and low interest rates made it a good opportunity for investors."

Corrigan notes that 1991's results were also helped by provincial housing projects.

Despite the expected decrease in multiple-unit construction, Corrigan predicts that 1992 will still be a "moderate to strong year for residential construction."

NEW BUYERS

Francine Andres, president of the Sudbury Home Builders Association (SHBA), says the association's membership is optimistic about 1992, particularly since the federal government has reduced the minimum down payment required for a home purchase to five per cent.

"We're going to see a lot of people who couldn't afford to buy a house come into the market," Andres predicts, adding that there is an estimated 50,000 people across the country who could now become homebuyers.

Andres says the association's optimism is illustrated by one member's plan to develop a 500-lot subdivision. The plans are still in the preliminary stages.

One local developer is also expecting 1992 to be a good year.

Dario Zulich, president of Zulich Enterprises Ltd., says residential projects play a large role in his firm's plans for the year.

"I can only speak for my company, but we have a lot planned for the year," he says.

Early last month Zulich's firm was in the midst of conducting a market analysis for a large-scale subdivision proposed for the city's east side.

In addition, Zulich says his company is examining the possibility of constructing an apartment building.

Zulich Enterprises is currently constructing a 107-unit apartment building in Sudbury's south end. The first phase of the project was scheduled to be completed and ready for occupancy by the first of the month. The second and third phases are expected to be completed by early summer.

The Sudbury developer says there is no reason to believe that the residential construction sector will witness a slowdown in activity this year.

"The ingredients are there for a good year," he adds.

However, Zulich admits that his firm has planned to reduce its activity in the commercial sector.

"It (the sector) is saturated. There is still space available and the market is not absorbing it," he explains.

Zulich's assessment is echoed by the executive director of the Sudbury Construction Association.

"Like everything else, the recession is having an effect on commercial development," comments Harold Martin. "No one is spending money and businesses are closing, so there is a lot of vacant property on the market."

However, commercial development is receiving a boost from Sudbury's hospitality sector, with one major project under way and a second one announced last month.

The first project, a $1.25-million addition to the Senator Hotel, began last fall. It involves the creation of a mini-conference centre with a main room for 200 people and three meeting rooms for up to 40 people each.

The hotel addition will also house an 80-seat restaurant, a 60-seat bar and 16 specialty suites.

The second project is a $3.5-million expansion of the Sheraton-Caswell Inn and Conference Centre.

Plans call for the removal of the hotel's original bedroom section, built in 1952. A seven-storey structure will be erected in its place.

Scheduled to start this spring, the project will add a new meeting and banquet room capable of seating 600 people and an expanded shopping concourse. When the project is completed later this year the hotel will have 240 rooms.

STRENGTH

Sudbury's industrial construction sector is expected to show some strength during the coming months.

Martin credits construction at Inco for keeping the sector going. The first phase of the company's sulphur abatement program and construction of the $46.2-million Ontario Geological Survey (OGS) building at Laurentian University were the two major industrial projects in the Sudbury area last year.

Despite pessimistic predictions for 1991, Martin believes the year was a good one for most of the area's construction companies.

"1991 was a little better than we expected, but that was because there was a lot of school renovations thanks to the province," he explains. "However, I don't think the government has the money to spend this year."

This year Sudbury-based construction companies are keeping their collective fingers crossed that industrial projects proposed for other parts of northeastern Ontario will come to fruition.

"There's talk of some (electrical) co-generation plants being built in Iroquois Falls, North Bay or Blind River," Martin says. "The days that a Sudbury construction company only works in Sudbury are long gone."
COPYRIGHT 1992 Laurentian Business Publishing, Inc.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Title Annotation:Sudbury Report
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Article Type:Industry Overview
Date:Feb 1, 1992
Words:867
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