Pedestrians walk past a construction site in Montreal, on April 28, 2020.Christinne Muschi/The Globe and Mail
Construction cranes that had been idled due to the COVID-19 crisis are swinging back into action on a growing number of building sites these days.
But real estate developers continue to carefully assess the impact of the pandemic on their projects, while also dealing with strict government regulations to ensure the coronavirus doesn’t spread, not to mention trying to forecast the longer-term outlook for the industry.
At Montreal condo developer Conceptions Rachel-Julien Inc., three of four project sites have restarted after the Quebec government eased restrictions on construction activity, said vice-president and director-general Mélanie Robitaille.
Right now, the priority is getting back to work on condo units slated for delivery on July 31, she said.
Measures her company has put in place include closing off multiple entrances to the sites, leaving only one central access point where workers are questioned daily about their health status and told to wash their hands. Employees are also asked to stay onsite throughout the workday and refrain as much as possible from proximity to other workers.
Only one individual in each condo unit room is allowed to do work at any one time.
“It can at times be less productive. It will create some delays,” Ms. Robitaille said. For example, handling bulky kitchen cabinets requires at least two people but the mandated two-metre physical distancing may not always be possible and workarounds must be found.
Hand-washing stations have been set up and masks, gloves and visors are provided, she added.
Barry Fenton, president and chief executive officer of Toronto-based Lanterra Developments, says workers’ temperatures are taken at all sites. He’s confident about being able to successfully manage the company’s condo projects despite the restrictions. Lanterra has about 3,000 units under construction in the Bay-Wellesley-Yonge area of Toronto.
He doesn’t anticipate major supply-chain disruptions besides some shipping delays. “I don’t think that’s going to be an issue.”
As to the pandemic’s impact on the condo market, Mr. Fenton is not buying into the argument advanced by some observers that the recession will dampen demand as hard-hit or out-of-work consumers put homebuying on hold. “This is not a financial crisis,” he said. “I personally don’t think we will have a prolonged recession.” The low-interest-rate environment helps and the condo market remains robust, he added.
Jason Annibale of law firm McMillan LP and three colleagues – Geza Banfai, Jamieson Virgin and Patrick Thompson – warned in a recent paper that “the end of the pandemic will undoubtedly lead to a significant increase in claims for delays or increased costs because of the COVID-19 outbreak, lead to changes in scheduling needs and reinforce the need to co-ordinate and co-operate at all levels of the construction pyramid.”
Mr. Banfai, counsel to McMillan on construction and infrastructure issues, sees some clouds on the horizon. “I’m a little worried for developers. I can see them getting hit in terms of construction costs and revenues,” he said in an interview. “Construction costs will probably rise as a result of inefficiencies. The other whammy is that, as the economy moves into recession, people have less available financial means to buy houses and condos.”
Montreal developer Broccolini, on the other hand, is upbeat about the resumption of activity.
Charles Rochfort, left, and Jonathan Grenier work on a home in Deux-Montagnes, Que., on April 20, 2020.Ryan Remiorz/The Canadian Press
The residential-commercial-industrial builder and property manager says it wants to get ahead of the post-pandemic curve, avoid delivery delays and even hire people in anticipation of “the rapid resumption of its activities in the coming weeks.”
Broccolini spokesman Jean Langlois said: “Our office staff has been, and remains, busy with all aspects of project planning and we are putting in place all necessary measures for a safe return on job sites.” Among major projects are the new Maison Radio-Canada building in Montreal and the Amazon fulfilment site in Toronto’s east end.
In Alberta, construction industry players have produced a COVID-19 management document to assist companies that might lack the know-how or resources to deal with the fallout from the crisis. The manual provides guidance on such topics as physical distancing, onsite sanitary measures and the handling of cases involving workers with signs of the coronavirus.
Statistics recently published by CIBC Capital Markets forecast housing starts across Canada to plummet to 70,000 this year from 200,000 in 2019.
In British Columbia, the B.C. Real Estate Association anticipates that sales will fall 30 per cent to 40 per cent in April and remain at depressed levels through the summer. However, it sees pent-up demand, helped by low interest rates, to eventually result in a return of homebuyers to the market.
Meanwhile, Canada’s biggest and hottest market – Toronto – saw home sales increase 49 per cent in the first 14 days of March compared with last year, then slide 14 per cent as the month ended.
Some real estate agents have expressed concerns that house prices will fall as buyers remain on the sidelines. Surging unemployment could be a key factor in curbing demand, a situation exacerbated by cash-strapped owners putting their homes up for sale, thereby flooding the market.
The pandemic could also have a longer-term effect in shaping new consumer wants and needs, resulting in different design approaches on the part of developers.
Toronto chartered accountant and real estate agent Scott Ingram singled out two aspects: the desire for more access to open-air private spaces and hygiene concerns.
“Repercussions I think we may see come out of this down the road are an increased emphasis on the popularity of balconies in apartments and a return to transition rooms like vestibules and mudrooms in houses,” Mr. Ingram said in an e-mail message.
Another COVID-19-related shift in new house- and condo-construction might be the setting aside of more home office space as a result of heightened demand in the wake of all the telecommuting during the crisis. That, in turn, could lead to a reduction in the amount of office space that is built.
Some urbanists – notably former Vancouver city planner Brent Toderian – are predicting that continued public fears of physical proximity on buses and subway cars will help boost car use. That could mean an expansion of parking spaces and garages in new residential, commercial and office developments.
Amid all the uncertainty, one thing in the real estate sector is clear. Industry players are acutely aware of the need to work together as much as possible to get through the crisis and go the extra mile to smooth out the many anticipated conflicts and contractual disagreements.
“We’ve been telling our clients, ‘Be reasonable,’” Mr. Banfai said. “There’s got to be lots of give and take.”
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