Ontario Construction Consortium: Construction continues through the pandemic

By Phil Gillies Ontario Construction Consortium

Special to Ontario Construction News

Media reports in November highlighted the fact that 10 new skyscrapers are under construction in Canada’s largest city – projects that will transform the Toronto skyline. These are gigantic projects.

The Skytower at 1 Yonge St. will be 95 storeys, the Mirvish-Gehry project on King Street will have one 91 storey tower and another 81. A building going up at 1200 Bay St. will soar 87 floors above this largely low and medium height neighbourhood. And at the corner of Yonge and Bloor, another 85-floor tower will face the existing 78-floor One Bloor St. East building. There are another six projects under construction – all 69 floors and up.

All this large-scale development seems incongruous at a time when Ontario, and indeed the world, has seen its economy devastated by the COVID-19 pandemic. But we must remember that the planning and financing of a large-scale project isn’t determined in a matter of weeks or months. The skyscrapers springing up have been in the works for years – they are not going to grind to a halt because of an emergency that has materialized this year. They are going up, and nothing is likely to stop them.

Right now, existing office buildings in Toronto’s core are like ghost towns. A survey of property managers indicates that actual utilization of the space under lease downtown is around 10 per cent. This writer recently walked from Queen’s Quay through Union Station, north through the PATH (underground shopping network), popping up in the lobby of the Sheraton Centre and then through the Bay store on Queen Street.

What I saw was startling. Walking through Union Station at 3:30 pm on a weekday would normally be a mob scene, as rush hour is starting. A pedestrian would be weaving through the streams of people jostling for space to get to GO trains and buses. Not so in November 2020.

I walked from one end of Union Station to the other and counted 50 people, including GO and station employees. Walking north from the station, the PATH was deserted. Almost all the hundreds of stores were closed and very few people passed by. This story was repeated in the Sheraton lobby and the Bay store.

While this is the situation in existing commercial space, new construction is carrying on at a robust pace. In addition to the megaprojects detailed above, there is ICI and residential construction going ahead throughout the GTA and indeed across the province.

Statistics Canada reports that the housing market remains resilient. New housing construction is ongoing, and prices are up – especially in cities and towns near our largest urban centres. Between February and August, residential unit prices increased 3.3% in Hamilton, 3.2% in Kitchener-Waterloo and 2.9% in Guelph. Reports cite prices rising in Brantford, Oshawa, Orangeville, and other cities outside of, but close to, Toronto. Buyers are looking for affordable locations outside of the big city. And as more and more people are now working from home, commuting distance is becoming less important.

The Fall Outlook Market Report Survey published in November by RE/MAX found that one-third of Canadians no longer want to live in large urban centres. They would prefer living in a suburban or rural setting. The pandemic has dampened people’s enthusiasm for living in densely populated neighbourhoods.

Construction workers are working – for the most part. The Procor Construction Activity Index confirms this, as do reports from contractor associations and construction unions. Ontario construction has been recovering since the week of May 25, with activity increasing 25% by the week of Sept. 14. This far outstrips the recovery in most other provinces. Only British Columbia is showing equally robust recovery.

Bruno Mandic, business manager of the International Union of Painters and Allied Trades District 48 tells us that most of his members are working. They are seeing a small decline in activity compared to 2019. Drywall and taping employment levels are down around 2%. The downturn is somewhat worse in glass installing which is down 20%, but this activity is expected to pick up as more projects near completion.

Ian Cunningham, president of the Council of Ontario Construction Associations, Ian Cunningham, tells us that there are fewer people working in construction now than a year ago, but the decline is not dramatic. Pre-pandemic there were approximately 540,000 people working in construction in Ontario. Today, that number would be closer to 516,000. Cunningham cites several reasons for the decline. There are increased costs for the industry because of elevated health and safety protocols. These new measures have slowed down productivity somewhat.

There are other factors to consider. Some families have children at home who would normally be in daycare or school, so a parent who would normally be working has to be at home.

So, while Ontario’s construction industry is carrying on quite well at present, there are possible storm clouds on the horizon. How much work will be available in 2021? This depends in part on how much money will be available for infrastructure projects. Municipalities have seen their revenues shrink dramatically due to COVID. They can keep rolling because of funding for operations coming from the province and the federal government.

But 50% of all infrastructure spending is done by municipalities. Will our towns and cities have capital dollars to fund infrastructure in the next couple of years? That remains to be seen.

Phil Giles is from the Ontario Construction Consortium, a think tank/lobby supported by the province’s unionized construction sector.

Ontario Construction Consortium: Construction continues through the pandemic

By Phil Gillies Ontario Construction Consortium

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