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Forecast looks at drivers of construction

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Alberta's construction industry will be driven by oilsands investment, flood reconstruction and commercial building in 2014, while B.C.'s industry will be boosted by shipbuilding and commercial construction.

Alberta's construction industry will be driven by oilsands investment, flood reconstruction and commercial building in 2014, while B.C.'s industry will be boosted by shipbuilding and commercial construction.

“Alberta is riding high on billions of dollars for flood repair and an urban construction boom on top of already strong employment driven by the perennial growth engine: the oilsands,” said Leslie Fowler, senior project consultant with BTY Group.

According to a market intelligence report recently released by BTY, oilsands investment will continue to drive Alberta’s economic growth in 2014, but at a slower pace than the recent construction boom.

“Already robust construction levels will also get a boost from reconstruction following the June 2013 floods, a still rising tide of new residents, and a boom in commercial construction,” said the report.

In Calgary, there is a residential and a commercial construction boom, as work proceeds on the first of two towers in the $1.3 billion Brookfield Place project.

Over the next four years, construction will take place on a dozen major commercial buildings and 15 residential towers.

The flood forced 100,000 from their homes and caused an estimated $6 billion in damages.

Net migration is expected to reach 95,600 in 2013 and 68,100 in 2014.

The influx of new residents pushed Alberta’s population to more than the four million mark in 2013.

There is also a construction boom in downtown Edmonton.

This includes plans for a $480 million arena, the $850 million Galleria Project and the $340 million Royal Alberta Museum.

In Fort McMurray, construction is taking place on a $258 million airport expansion and there is a surging residential market.

There are also plans for a new civic centre, a downtown arena, a public square and more highrise towers.

Housing starts are forecast to rise from 34,200 for 2013 to 34,900 for 2014, but the figure could be higher due to rebuilding from the flood.

The provincial government pledged to invest $1 billion for flood reconstruction and capital spending is expected to be $5.7 billion in 2014.

The latter includes $2.1 billion for health care facilities, $785 million for new schools and post-secondary education, and $442 million to twin the sections of Highway 63.

As a result, Alberta’s gross domestic product is expected to grow by 2.0 per cent in 2013 and 3.1 per cent in 2014.

BTY is predicting that Alberta’s construction costs will increase by 4.0 per cent to 6.0 per cent in 2014.

In B.C., one of the most significant drivers of economic growth and demand for skilled trades will be a $3.3 billion contract awarded to Seaspan Shipyards in 2013 for 10 vessels.

“Competition for skilled trades is heating up with energy projects expected to take the lead in B.C.,” said BTY senior cost consultant Angela Lai.

“Vibrant commercial construction, sustained infrastructure investments, and $11 billion in long-term shipbuilding contracts are also stoking demand.”

The recent Seaspan contract follows an $8 billion shipbuilding contract announced in 2012.

In addition, B.C.’s construction industry will be driven by a balanced residential sector, ongoing large-scale commercial projects and transportation infrastructure projects in 2014.

Commercial and retail projects include new developments valued at $1.6 billion in downtown Vancouver.

The Surrey City Centre expansion will involve the construction of 10 more towers in the next decade, along with a five-star hotel and a performing arts centre.

Overall, there are 20 commercial developments in the planning or rezoning stages in the region, and three major mall renewals planned or under way.

Infrastructure will also see high levels of activity with Canada’s largest water filtration plant, major airport and port expansions, a new transit line and ongoing highway projects.

Planning is well advanced for three of four hydropower projects (Site C, Ruskin, John Hart and Forest Kerr), and two transmission lines.

These projects have a construction cost of $10.3 billion.

In-migration increased from 33,000 in 2013 to 41,000 in 2014, which will help sustain housing starts at 27,900 in 2014.

This is up slightly from 26,800 in 2013.

B.C.’s economy is forecast to grow by between 2.5 per cent to 2.7 per cent in 2014, up from about 1.4 per cent in 2013.

BTY is predicting that B.C. construction costs will increase by 1.0 per cent to 2.0 per cent in 2014.

Long-term growth in B.C. will be driven by an investment of about $35 billion for the creation of a liquefied natural gas (LNG) industry.

This figure does not include Petronas’ $35 billion project announced in late 2013.

Shell Canada’s $12 billion joint venture export facility and Apache/Chevron Corp.’s $4.5 billion liquefaction plant and marine terminal have export licences, and the associated $1.3 billion Pacific Trail pipeline has been approved.

Proposed pipeline projects valued at more than $10 billion for transporting bitumen from the Alberta oilsands to the BC coast may also boost long-term growth. These projects still need to receive regulatory approval and resolve First Nations’ issues.

by Richard Gilbert

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