The dark clouds hovering over the Victoria real- estate market as a result of a very slow start to the year do not seem to have dimmed the prospects of those who swing hammers and wield cranes.
Though home sales are well below last year’s pace, there is some optimism in both the residential and commercial building sectors as cranes remain at work on several condo projects around the city and commercial crews have been bringing a steady stream of new projects out of the ground.
Greg Baynton, chief executive of the Vancouver Island Construction Association, said building activity is brisk and will improve.
“The shining light for Victoria is we saw a nine per cent gain in residential construction last year,” said Baynton. “That was specifically down to condo towers going up and that market is still vibrant in the city. The other plus is the construction industry up and down the Island has been blessed with the investment in commercial construction.”
While Baynton remains cautiously optimistic for the whole of this year, he did say 2013 will be an improvement over last year and should lead into strong years in 2014-2016.
“We should see condo and commercial building continue for the next six months. Add to that the traditional seasonal gain as we are into spring and we’re definitely out of the Christmas-New Year doldrums,” he said. “In 2013 we will see modest gains, but we have seen better times.”
One of the big projects early this year is a $37-million care home at 3814 Carey Rd. The 260-unit building is a project of the Surrey-based Lark Group and broke ground recently.
Baynton said that kind of project, Thrifty Foods’ recent remodelling and construction at a number of its Island locations and shopping mall upgrades are keeping the industry ticking over.
“Uptown has been going on now for some time, but what’s happened because of Uptown is important. It has driven investment into Hillside Shopping Centre, which is not only building a Target location but is in order to keep up with the Joneses having to make a big investment on the rest of the mall,” Baynton said.
Hillside’s renovation cost is tabbed at $70 million. Tillicum Centre will see $11 million spent developing its Target store.
But even that kind of investment pales with what’s coming. Baynton said big public spending is in the offing with a number of schools getting earthquake upgrades, the $1-billion John Hart dam project and $600 million for hospitals on the North Island.
“Those projects won’t put shovels in the ground in 2013, but in 2014 we expect a huge uptick. In 2014 to 2016, we will have investment like we’ve never seen before,” he said.
The homebuilding industry is equally bullish, according to a report from Canada Mortgage and Housing Corporation.
A first-quarter market outlook suggests the Victoria region is forecast to see 1,800 new housing units started this year, a 5.9 per cent increase over 2012 and a 2.2 per cent increase in 2014 to 1,840 units. Those totals include a 28.6 per cent increase in single-family homes in Victoria this year alone.
Casey Edge, executive director of the Canadian Homebuilders Association Victoria, said the number does appear high, but there are factors in its favour with the scrapping of the harmonized sales tax, continued low interest rates and low building costs.
“For me the wild card is the HST,” said Edge. “It has been a factor in the decline in housing starts and with its removal it will be interesting to see how much pent-up demand is out there [for new homes]. I will be convinced when I see the numbers start to come in.”
Provincewide, the federal agency is predicting a 4.9 per cent increase in total units started this year and a 5.9 per cent increase in 2014.
The increase in construction activity, however, does mean a labour shortage. Baynton noted the booming resource sector in northern B.C. and the Alberta oilfields are already attracting skilled trades and general labour. The shortage is exacerbated by an aging workforce.
Baynton said demographics are trumping economics and in a modestly improving marketplace companies are finding it difficult to find people.
“Right now it’s hard to find estimators, project managers and some trades,” he said. “There are some challenges for sure.”
Baynton said they will likely see people staying in the workforce longer than expected. “That will help, a lot of the brain trust is in those people approaching retirement,” he said.
© Copyright 2013