Tight market
Victoria garnered cheers from many quarters when it announced its Skills for Jobs Blueprint at the end of April, with BC Construction Association president Manley McLachlan adding his own applause to the plan to train workers to fill nearly a million job openings by 2022.
But if the province's commitment was clear, it was equally clear when McLachlan addressed commercial real estate association NAIOP on May 15 that the need for skilled workers has only gotten worse.
Back in 2006, when BuildForce Canada (then the Construction Sector Council) was forecasting a need for 34,800 construction workers by 2014, McLachlan said an estimated 20,000 retirements would leave the sector short of management expertise.
“We think we'll have a challenge on our hands trying to capture that knowledge prior to it leaving,” he said.
Today, with 38,500 workers eligible for retirement in the next five years, there's hardly been an improvement in the outlook.
“Those 38,500 are the skilled, experienced folks who make projects go around, who actually train the apprentices that are on the job sites,” he told NAIOP. “You don't get a kid out of high school who works two or three years and put them on an industrial job site and expect that they're going to be able to work safe[ly] and productive[ly].”
And especially not on the site of liquefied natural gas (LNG) plants and similarly complex projects. KPMG Canada partner Mary Hemmingsen told NAIOP that proponents of LNG projects in B.C. are watching how welcoming the province will be to foreign labour before committing to projects. A lack of skilled labour – particularly project management expertise – gobbled up budgets in Australia, and proponents want to avoid a similar scenario in B.C.
McLachlan, for his part, told NAIOP the province shouldn't fear foreign workers, because they're the ones with the expertise the province lacks – expertise that comes from experience, not schooling.
“We need to shift this whole notion that somehow jobs are being taken away from British Columbians,” he said. “They're actually creating the opportunity for up to seven new jobs for young people to get into the industry.”
Loosening up
Cushman & Wakefield Ltd.'s year-end retail report for 2013 revealed that the one neighbourhood of Vancouver where rents became less affordable over the past year was Kerrisdale. Rents shifted up to $30 to $55 a square foot, up $5 a square foot from a year earlier.
This may explain why long-time Kerrisdale resident Ron Appleton, owner of Appleton Galleries in Marpole, recently contacted Business in Vancouver regarding a rising number of vacancies in the neighbourhood. Major national retailers and local retailers alike have vacated premises this spring, from Pier 1 Imports to West Coast Country Club, a 21-year fixture on West 41st Avenue.
“The thing is, nobody seems to be moving in,” Appleton said.
Colliers International's spring retail report indicates that neighbourhood retail vacancies in Vancouver are stable at 4% to 6% – cold comfort to observers such as Appleton, who feels property taxes and rising rents have combined to make life more difficult for merchants.
“I've never seen it like this,” he said. “And we've been in Kerrisdale 35 years. It's very strange.”
Affordability squeeze
By the time this column appears, the Real Estate Board of Greater Vancouver will no doubt have issued its monthly sales statistics. Chances are prices will have inched up yet again – there hasn't been a May for the past decade that hasn't seen the benchmark price rise.
All things being equal, sales activity should have pushed the new regional benchmark north of $620,000 – a rise in keeping with the latest housing affordability report from RBC Economics, which reiterated its long-standing concerns last week about declining affordability in Vancouver.
But in a welcome nuance, the report pointed out that declining affordability was largely the result of single-family home prices, which rose, while condos became more affordable for the third straight quarter.
An affordable home typically requires no more than 32% of household income.
A condo now demands 39.9% of a buyer's household income, while detached homes require at least 82.4% of monthly household income. The qualifying annual income for each property is $75,100 and $155,100, respectively.
