Resource extraction, mixed-use projects and basic infrastructure led B.C. construction starts in 2016, as contractors dug into projects that represented a cross-section of the provincial economy.
Work on the province’s first mine in six years focused exclusively on gold production began in Iskut with Pretium Resources Inc.’s (TSX:PVG) long-awaited Brucejack project, while the oil and gas sector received a boost with Calgary-based Veresen Midstream LP’s Tower natural gas plant south of Fort St. John.
The two projects top the list of the province’s biggest starts for 2016, representing more than $1.5 billion in investment. Together, the two projects provide employment for thousands of workers, though both are scheduled to be completed this year; the Brucejack mine will start production this month, while Veresen expects to commission its Tower natural gas facility to begin operations in 2017’s third quarter.
“There’s been a lot of strong construction activity in most regions of the province,” said Chris Gardner, president of the Independent Contractors and Businesses Association of BC. “The north is a little more challenged because some of the planned LNG [liquefied natural gas] projects haven’t moved forward but … we’re happy with the level of activity that we’ve seen in the recent past.”
It isn’t just resource projects that are boosting activity. Among the $75.1 billion in major projects on the go around the province are a number of critical health-care projects, including a five-year, $312 million redevelopment of the Penticton Regional Hospital. The project includes the addition of a 288,000-square-foot in-patient tower. On Vancouver Island, a 320-bed residential-care facility, including 60 rooms for dementia patients, broke ground with a budget of $86 million. It’s set to be completed in 2019.
Hydroelectric projects and road upgrades, such as the $150 million redevelopment of the Lower Lynn interchange in North Vancouver, are also part of the action.
“The province announced that there’s $24.5 billion worth of infrastructure investment that’s going to take place, that’s either underway or planned,” Gardner said, referencing February’s budget speech. “That’s driving a big part of the activity in the construction sector.”
Residential construction continues to drive activity in the south of the province. With a record 39,096 housing starts provincewide in 2016, the biggest included Burrard Place, a $500 million mixed-use project Reliance Properties Ltd. is undertaking with the Jim Pattison Group. Also making the list are two waterfront projects by Bosa Properties Inc. and Concert Properties Ltd.: RiverSky in New Westminster and The Creek overlooking False Creek in Vancouver, respectively.
Together, the three projects represent $750 million worth of construction and a total of 2,138 residential units. Burrard Place will also have a 135,000-square-foot office tower and a 100,000-square-foot strata office component.
However, there are signs that the pace of construction is slowing, notwithstanding the province’s promise of billions in investment and the recent groundbreaking for a $3.5 billion replacement of the Massey tunnel. (Preparations for the project began last fall, as work began to move BC Hydro’s transmission station in the tunnel to sites in Richmond and on Deas Island.)
While quarterly starts peaked in the third quarter at 25, the highest-value starts occurred in the first half of 2016. Smaller projects kept things moving the rest of the year. While building permit values set a new record for the province at $13.3 billion for the year, residential projects set the pace rather than major institutional, commercial or industrial proposals.
While many observers have pointed to sluggish approval times for residential projects across the Lower Mainland, particularly in Vancouver, Gardner said projects across the province depend on smooth approval processes – as do the workers they employ.
The province’s construction sector employs about 223,600 people, and the province’s promised infrastructure infusion could support a further 30,000 jobs, but it won’t happen without timely approvals. The contrasting fates of the Site C dam project and LNG developments are ample testimony.
“Investment in British Columbia is at risk if we aren’t able to approve projects in a reasonable time frame,” Gardner said. “That crosses all levels of government.”
Still, the 2,000-plus members of his association are optimistic. A recent survey suggested that 53% expect 2017 to be busier than 2016, the most optimistic read in four years.
“This was the highest result in terms of the percentage of companies planning for growth in the year ahead,” he said. “What we’re seeing is strong activity in the construction sector and companies planning for growth. Our members are generally busier.”
