Construction costs remain problematic
By Adam FreillConstruction Construction Materials Financing
New quarterly cost report from Rider Levett Bucknall indicates costs escalation is slowing, but uncertainty looms.
As we hit the mid-point of 2023, economic uncertainty looms large as both inflationary and workforce concerns continue, reports international property and construction consultancy firm Rider Levett Bucknall (RLB) in its latest Quarterly Cost Report.
The report looks at 14 key North American construction markets, including two in Canada, to gain a perspective on the industry’s trajectory. While the non-residential construction sector is still having a solid year of growth thanks to mega-projects and infrastructure, the same cannot be said for the residential sector, where the construction of new single-family homes has been in decline.
“As we approach the halfway point of 2023, the economic uncertainty hasn’t become any clearer as the year progresses. That uncertainty looms large as economic and workforce shortages concern the construction industry,” stated Julian Anderson, president of RLB North America. “While demand for construction remains strong, possible inflation, bank failures, and recession fears still feed the uncertainty and a potential slowdown for 2024.”
Looking at the larger of the two Canadian cities in the index, Toronto, RLB says the city experienced a 14-year low in condo sales in Q1 of this year, and is navigating a tight labour market, but is being bolstered by transportation infrastructure rehabilitation and enhancements, as well as spending on water infrastructure. Immigration should also help with the recovery of the residential market.
In Calgary, the city got off to a strong start in Q1, and the overall value of construction has increased by six per cent year over year to $1.17B, however the city is anticipating a decline in overall permit volume applications as mortgage rates and cost of living are both on the rise.
Read the complete 2023 QCR Q2 report here.