EDUCATION: Economic update offers insight into effects of COVID-19
By Grant Cameron / RESCON
It was the best of times, it was the worst of times.
The old adage penned by writer Charles Dickens was one of the themes of a Webex economic update meeting for RESCON members on June 25 called “Interesting Times in Construction” sponsored by Altus Group.
During the one-and-a-half-hour event, members were provided with an overview of what the GTA real estate and development market looked like pre-COVID and what the tea leaves reveal going forward.
Michael Commons, president, cost and project management at Altus, and Marlon Bray, senior director, cost and project management at Altus, provided the latest insights, updates and developments related to the impacts of COVID-19.
The big takeaways?
In the first month of the pandemic in March and April, there was an initial loss of productivity of 40 to 50 per cent in the industry. The reduction in productivity varied by trade and roughly 25 per cent of workers were not showing up for work.
In April, May and June, most developers ran at 75 to 90 per cent productivity. Social distancing had an impact on productivity and work was also slowed, as workers needed clearances to get on site and individuals were restricted on site.
For the remainder of the year and into 2021, Altus expects productivity to be impacted until a widespread vaccine is developed, or measures are changed on site.
In 2019, the industry had a relatively good year, as new single-family homes sales in the GTA increased by 9,500 units, or 157 per cent over 2018. New condo units increased by 26,900 units, or 27 per cent, over the same periods.
International migration to the GTA continued on an upward trend and increased to 151,400 individuals in 2019.
In the first quarter of 2020, sales of single-family units reached 4,154, compared to 1,998 the year before, while sales of condominium apartments reached 6,458, compared to 2,976 the year before.
Despite the uptick in recent construction, the rental apartment universe is made up of older units. Seventy-seven-per-cent of apartments in the GTA were built before 1980.
Looking forward, both Commons and Bray agreed that nobody knows exactly what’s going to happen.
The housing starts outlook, for one, is a moving target and much depends on the length and breadth of the current disruption. Toronto resale listings dropped 53.1 per cent in May, compared to the year before.
An Altus survey showed that layoffs and rising unemployment are the top perceived risks for office, industrial and multi-residential real estate market fundamentals.
On the employment front, 93,000 construction jobs were lost in Ontario in April and 3,100 were added back in May. While the stats were not broken down by sector, it is expected that fewer jobs were lost in residential construction as the majority of the residential industry – through enhanced safety procedures and policies – was able to stay open.
A survey by the Ontario Construction Secretariat indicates that contractors anticipate physical distancing and PPE requirements will increase project costs by 28 per cent going forward.
The presentation highlighted that $144 billion in new infrastructure has been promised over 10 years. As well, there is a move to streamline the approvals process, increase density around transit and increase modularization.
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