Canadian economy expected to grow despite environment: Turner and Townsend report

Turner and Townsend has released its 2022 Canadian Construction Market Intelligence Report. The report assesses the market conditions at the national and individual provincial level. 

According to its findings, Canada’s economy is expected to continue to grow despite the changing macroeconomic environment. The tight labour market and supply chain disruptions continue to impact productivity and the availability and cost of goods and building commodities

“As a result, we believe that the inflation trend will stay elevated which, in our view, is likely to define the rest of the year for the construction sector. More locally, many provinces are experiencing stronger economic conditions, with a high volume of new job openings as firms increase hiring in anticipation of future demand,” says Turner and Townsend.

The company also expects that several interest rate increases in 2022 could introduce volatility to the market. But, while the looming policy changes could impact the capital investment outlook for some industry segments, others are experiencing overwhelming consumer demand – like data centres and supply chain logistics facilities – where speed-to-market and capacity remain paramount to their operations and revenue.  

Additionally, ESG (Environmental, Sustainability and Governance) considerations are playing an ever-greater role in how and why capital is invested, prompting the construction sector to transform itself through innovation and financial commitments to sustainable, net-zero policies. The net result is likely to see some segments maintaining a “wait and see” position, while others accelerate existing construction development plans to meet future regulatory and consumer demands.   

Infrastructure investments have been prioritized in many provinces. The organization states that we may see a shift in procurement policy to prioritize a quality-based approach in lieu of the traditional lowest-bidder rule.

The report further reveals that the pandemic challenged the “best resiliency plans” and prompted many to adapt their business models, the articles below identify how organizations in real estate, infrastructure and natural resources are adapting to be more sustainable and resilient:  

• Real Estate – Can existing stadiums deliver the experience expected of world-class events? – The IOC pledged to cut its greenhouse gas emissions by 50 percent by 2030, as a result major event programs need to be sustainable. The recent trend from bidding hosts capitalizes on the shift towards re-use rather than new build. This means programs use existing venues and infrastructure, but the challenge for organizers and stadium owners is to adapt and retrofit stadiums to create the ‘razzmatazz’ expected of a newly built stadium at an event on the world-stage. 

• Infrastructure – Airports adapt to best-in-class resiliency – The world is experiencing an increased number of black-swan events, from pandemics to extreme weather events. These events test even the best capital and operational resilience plans, and airports are some of the most vulnerable businesses. As a result, airports around the world are quickly adapting to this new reality by creating agile business models that diversify income streams, utilize technology to optimize accessibility both now and in the future, and allow them to ramp up or consolidate operations as demand fluctuates. 

• Energy – Decarbonizing emission intensive industries with CCUS – Canada’s natural resources sector accounts for over 15 percent of GDP, presenting a challenge to its net-zero goals. Carbon capture, storage, and utilization (CCUS) technology is an opportunity for Canada’s emission intensive industries to maintain competitiveness in a net-zero world. CCUS has developed from small scale to large scale network operations that allow multiple facilities to contribute, thereby maximizing the value of the project. While the technology may not be fully proven at such scale, several projects have commenced. A pragmatic, technology and data driven approach can help to minimize risk and maximize the value of these projects.