Building boom faces worker shortage
Permits surpass $1 billion in first six months of year
Vancouver Island has seen more than $1 billion worth of building permits issued so far this year, but the increased pace of construction could be threatened by the looming labour shortage.
While cranes crowd the skyline in Victoria and the region’s homebuilders are booking work well into late 2018, builders said projects are being delayed and costing more as construction companies are pushed to their limits.
“It’s been a challenge,” said Rory Kulmala, chief executive of the Vancouver Island Construction Association. “We are fighting a declining demographic anyway — by 2025 we expect B.C. will be short 15,000 skilled tradespeople.”
Kulmala said the problem is there are simply not enough young people going into the trades. Meanwhile, construction crews are working full-out on the Island, and every year they face more people retiring.
“It stresses out the industry. There are discussions being had about bringing in trades from other places in Canada, but this is a problem across the country,” Kulmala said. “It’s not as easy as saying: ‘Hey, come to Victoria.’ ”
The result is projects are taking longer, costing more or being delayed.
“It’s a drag on moving construction further and faster. Guys can only do so much with the resources they have,” Kulmala said.
Contractors are starting to be more pragmatic and honest with property owners and developers that their projects are going to take longer to complete, he said.
Despite the shortage of labour, the construction industry continues to hum on the Island.
According to figures released Thursday by the Vancouver Island Construction Association, there were $1.06 billion in building permits issued through the first half of this year, a 19 per cent jump from the $890 million issued through the first six months of last year.
Residential building permits issued this year totalled more than $800 million, an increase of 24 per cent from the $653 million in 2016, while the value of nonresidential permits jumped six per cent to $252 million.
The significant increase in permits means there’s plenty of work on the Island.
“There’s a lot of activity for a long time,” Kulmala said. “I don’t think we will see the same jump in permits [in 2018], but I suspect we shall maintain the level for the next four to six years. There are a lot of non-commercial projects out there, industrial and institutional and a lot of industrial activity on the North Island.
“And housing is busy, those guys are backed up for a year and sometimes two.”
The association estimates by the end of this year the Island will have seen a 20 per cent increase in the total value of building permits.
In Greater Victoria, there have been $648 million worth of permits issued so far this year, a 22 per cent increase over the same time last year.
Residential permits accounted for $470 million of that, a 27 per cent increase, while the value of the nonresidential permits issued increased 10 per cent to $177 million.
Kulmala said the expansion is being fuelled by demand for new buildings from a growing economy and population base.
According to the construction association, the expectation is the population will continue to grow as a result of in-migration from the rest of B.C. and other provinces, while economic growth will remain buoyant as a result of the low Canadian dollar, low interest rates and growth in the American economy.
“We expect residential activity to grow and non-residential activity to broaden out to more areas of Vancouver Island,” said Kulmala.