This could be the era of the megaproject driving B.C.'s economy. The province recorded further gains in major project activity during the first quarter, with growth in construction and a spate of new project proposals.
According to the B.C. government's Major Project Inventory, the combined capital costs of first-quarter major projects under construction rose to $84.1 billion, up 3% from the fourth quarter and in line with year-ago levels. Major projects are defined as those with a capital cost of at least $15 million ($20 million in the Lower Mainland). Project completions were outpaced by the value of projects moving from proposed to construction phase.
While projects under construction crept up at a measured pace, the value of project proposals climbed to a new high despite two mining projects being shelved over the past year due to weak market conditions. The value of proposed projects rose 1% from the fourth quarter to $206 billion and 26% from a year ago. Growth in proposed projects has been extraordinary. Despite a slow-growth economy, the value of total proposed projects has more than doubled since 2008.
Lower Mainland projects led new first-quarter construction activity. The largest projects included the $1 billion Tsawwassen First Nation mixed-use residential/hotel/commercial development near Robert's Bank and a $1 billion Concord Pacific condo project in False Creek. The $360 million Trump International Hotel project in downtown Vancouver also started. Elsewhere, construction started on the $235 million Fort St. James Green Energy biomass project.
The persistent uptrend in the value of proposed projects points to a strengthening of B.C.'s economy within the medium- to long-term horizon. While many are in preliminary development stages and could languish in the proposal stage for years, the rising numbers should translate into relatively more project starts.
Regionally, the north continues to punch above its weight, accounting for nearly 70% of all proposed project spending – largely related to liquefied natural gas (LNG) terminals, pipelines and mining projects. While we remain optimistic, this year's expected final investment decisions for a number of LNG projects will indicate whether B.C.'s nascent LNG industry thrives or ends as just another pipe dream.
