There is good construction momentum in Calgary, despite supply chain glitches, labour issues and various other speedbumps.
By the end of last year, several large construction projects were completed. The highest profile major project was construction completion of the $1.4-billion, 186,000 square metre Calgary Cancer Centre, the largest hospital of its kind in Canada and the second-largest in North America. The dazzling glass and steel structure, on the northeast corner of the Foothills Medical Centre, has now been handed over to Alberta Health Services, to equip it with the rooms, the beds, the offices, the state-of-the-art equipment and the staff to operate it.
The massive BMO Centre construction is on track for completion next year.
It may be subtle but in Calgary, as in most major Canadian municipalities, the city is actually commercial construction’s biggest customer, with infrastructure projects and expenditures like LRT lines and terminals, interchanges, new roads, road widenings and repairs, overpasses, pedestrian bridges and others.
By the end of last year, the City completed various infrastructure construction, such as the Stoney Trail North interchanges at Shaganappi Trail and Harvest Hills Blvd., Banff Trail-area improvements, the McKnight Pedestrian Bridge Rehabilitation, operational safety improvements such as the Bow Trail U-Turn and ramp improvements at 16 Avenue NW, and others.
Because infrastructure construction also includes extensive, last year the city did road paving in 122 locations, totaling 274 lane kilometres. And Calgary’s construction momentum continues with much in-progress work in 2023. The final leg of the five-decades-in-the-making Calgary ring road project has already had some key completions, although the full opening of the west ring road – extending from Old Banff Coach Road to Highway 8, completing the 101-kilometre free-flow highway encircling the city – will not happen until fall 2024.
Construction sector experts are enthusiastic about the post-pandemic rebound and momentum, and also caution that moving forward, Canada’s, and particularly Calgary’s, construction is dealing with some significant challenges. Primarily, but not exclusively, the lingering consequences of supply chain issues and tight labour supply. “One of the most significant impacts of the pandemic on the construction industry was the impact on the pool of available workers,” says Bill Ferreira, executive director of BuildForce Canada, the respected national organization committed to the development of a highly skilled construction workforce.
“While the construction sector was less impacted by government efforts to contain COVID-19, many in the sector were temporarily forced out of the labour force by government pandemic containment measures. As construction demands increased throughout 2022, the labour force struggled to keep pace with the employment surge, which contributed to the new record low levels of unemployment experienced this past summer. Job vacancies reached all-time highs in the spring/summer, and in September, Alberta’s construction industry had nearly 9,900 vacant positions.”
Ferreira points out that the most significant speedbump for the construction sector across Canada is grappling with an aging labour force. He notes that, for Canada as a whole, 20 per cent of the population are currently between the ages of 50 to 64, a significant portion of the population that will be exiting the labour force in the next 10 to 15 years. “Even for Alberta, which enjoys a younger population than the rest of Canada, it is already faced with 18 per cent of the population in that 50-to-64-year age group,” he says.
The tight construction and trade labour market impacts the vital construction domino effect of higher costs. According to Bill Black, president of the Calgary Construction Association (CCA), “It translates into increases in the price of labour, as Calgary companies compete for available employees. While labour availability is one factor, inflation, the spiking cost of construction projects, is bring driven by ongoing supply chain issues, which have pushed costs 15 to 30 per cent higher, depending on the project. Supply chain issues also continue to stretch project timelines and delivery due to standard products such as heating, ventilation and air conditioning equipment, taking as long as a year to arrive on a job site. While the problem has existed for years, it was exacerbated during the pandemic.”
Black agrees that the combo of available labour and supply chain issues hover over Calgary’s construction sector. “Labour is a major constraint across all industries and construction is definitely feeling it. Canada’s immigration needs to be streamlined, because the current points system does not match our actual needs, and processing times are unacceptable. Supply chain is by no means back to normal (and never will be) but at least it is becoming more predictable.”
There is cautious construction positivity from Mark Garner, executive director of the Calgary Downtown Association. “The downtown commercial core is the heart of our city, and construction and development projects in the downtown core are key drivers in the revitalization of downtown. Continued investment in downtown revitalization is critical to the health of our city, but there must be a balance between commercial and residential development, various infrastructure investments and thoughtfulness around the best mix of retail services and amenities to ensure we are a building thriving, vibrant downtown community.”
Garner mentions some other important Calgary construction milestones. “The Green Line and Bow River pathway enhancements, and this year’s completion of the Bow River pathway through Eau Claire. And other exciting projects in the Calgary construction pipeline, like The Glenbow Museum, Arts Commons, commercial to residential conversions like Palliser One, and the future of Stephen Avenue.”
Bill Ferreira underscores that the construction outlook is good for Alberta. “In 2023, population growth in Alberta is likely to be revised upwards as federal immigration targets have been increased. This will continue to drive demand for multi-family home construction as newcomers tend to become renters before purchasing a home. Rising interest rates are anticipated to cool construction for single-detached homes, but due to the age structure of Alberta’s population and their strong preference for these types of homes, downturns in Alberta are expected to be slightly less pronounced than in other provinces.
“Commercial building investment is projected to continue rising this year, related to anticipated rising population growth which will increase the demand for shopping malls, stores and tourism-related buildings.”
The CCA’s Bill Black is forever blunt but cautiously optimistic about Calgary construction in 2023 and beyond. He’s revved that Calgary is busy across all construction sectors, including building schools, road work, home starts and other commercial, infrastructure and industrial projects.
Black also points out that the actual numbers do not include all the other professional service businesses that play a role in construction, such as accounting, legal and human resource firms. “There’s no doubt about it. It is an encouraging reminder that construction is a vital sector of our Calgary community, both in terms of the physical assets that we build, as well as the number of Calgarians that are directly involved. And it is good to see stats and trends showing growth, especially after such a long period of downturn and kind of flatlined low levels.”
“There is a good chance that we will see this brisk level of activity continue, and hopefully it is stable growth. With a provincial election coming, it places a question mark over mid-year and post-election activity.
“We will need to see what that landscape looks like,” he says. “But all things considered, Calgary’s population growth projections are healthy. About 50,000 people per year. It will be a major driver in our future as residential and commercial construction will all be impacted, not only in terms of construction volumes but also attracting talent.”