Figures reflect buoyancy in the sector, builders say
Gillian Shaw
Sun
B.C.’s major construction projects reached a record level in the third quarter of this year, with close to $110 billion worth of construction planned or underway between July and September.
The figures in the province’s major projects inventory released Friday show the number of major capital projects up 20 per cent in the last 12 months.
The torrid pace of building in the province has driven up costs, but there is an expectation that the rate of those increases will moderate in the coming years.
“I don’t think they are going to fall but the rate of increase is going to be much less pronounced,” said Philip Hochstein, president of the Independent Contractors and Businesses Association of B.C. “The one-per-cent increase per month we have experienced over the last couple of years is behind us.”
Hochstein said even accounting for the increase in construction costs, Friday’s figures reflect unprecedented buoyancy in the sector.
“It’s true that a project that five years ago would be $10 million is probably close to $18 to $20 million today, but even half of $110 billion is a lot of work,” he said. “The future for the construction industry in British Columbia has never been better. It is a great time to be in the industry or to start your career.”
Hochstein said while the province is accustomed to a boom-and-bust cycle in construction, the sector’s current success seems to be more sustainable.
“I think it shows confidence in the future of the province,” he said. “You don’t build an addition to your house unless you think tomorrow is going to be better than today and that’s what this inventory says — it says there is a lot of faith in the future of British Columbia.
“Otherwise you wouldn’t have this kind of investment.”
Hochstein said investment intentions indicate there will be no dramatic fall-off in construction in the wake of the 2010 Olympics, a view shared by Colin Hansen, B.C.’s economic development minister.
“People talked about the post Olympic construction phase, but what we are seeing now is a lot of these projects will take us into the years beyond the Olympics,” he said, adding that Olympic construction amounts to only about half of one per cent of the current quarterly figure. “The other thing we are looking at very deliberately in terms of public construction is how we can sequence our projects so we don’t overheat the construction market more than it already is.”
Hansen said the latest quarterly figures are also encouraging because they demonstrate construction growth is occurring right across the province.
“I think the good news out of this is … we are seeing this activity is happening in every corner of the province,” he said. “A couple of years ago we were seeing good growth in the major projects inventory but a lot of that was centered in the Lower Mainland.”
In the third quarter of the year there were 783 projects planned or underway, totaling $109.9 billion in value, compared to 650 projects worth $82 billion in the same period last year.
The inventory includes projects in the Lower Mainland worth $20 million or more, as well as projects of $15 million or more in other parts of the province.
The quarter saw 43 new proposed projects, totaling $4.7 billion in capital investment if all the projects proceed. Construction began on 44 major projects, worth an estimated $2.2 billion.
The largest project to start during the quarter is the $350-million Fairmont Pacific Rim project on Vancouver’s downtown waterfront, followed by the $300 million Azure residential towers in New Westminster and the $178 million Olympic speed-skating oval in Richmond.
Construction was completed on 30 projects during the quarter, accounting for a capital cost of approximately $1.5 billion. The largest project completed was the $208-million Port of Vancouver Centerm and Vanterm expansion project.
The estimated capital cost of major projects currently under construction in the province was $40 billion for the quarter with the capital cost of proposed projects tallying almost $63 billion, up from $58 billion in the last quarter. A further $3.2 billion worth of projects are judged to be on hold for the time being.
© The Vancouver Sun 2006