The COVID-19 pandemic has strangled B.C.’s once full-throttle private construction industry, but, with ironic timing, it is a multibillion-dollar hospital construction program that may salvage an industry that accounted for nearly a fifth of the provincial GDP in 2019.
B.C. housing starts have already dropped 30% from last year, and Metro Vancouver condo launches have plunged 75%.
The COVID-19 crisis may also topple plans for up to five new Vancouver office towers that were to start construction this year and next.
“Few office tenants are looking to move into new space, and many want to reduce short-term costs,” commercial agency CBRE cautioned in a second-quarter report on Metro Vancouver’s office sector.
The result is that 500,000 square feet of unwanted sublease space has been shoved back onto the market, nearly doubling the downtown vacancy rate to 4% within the last quarter alone, CBRE noted.
The Business Council of BC forecasts that construction spending could drop as much as 12.8% this year from the $21.7 billion level of 2019, if COVID-19 restrictions continue into the fall. But, as it has with tenants and workers blindsided by COVID-19, government spending could sustain B.C.’s construction industry as it battles through the pandemic.
The B.C. Ministry of Health will spend at least $4.4 billion over the next three to five years on 13 major hospital construction projects and upgrades, according to B.C. Finance Minister Carole James.
New hospitals are by far the most costly construction project. According to the 2020 Cost of Construction Guide from Altus Group, a new Metro Vancouver hospital costs an average of $888 per square foot to build, compared with $400 a square foot for a Class-A 30-storey office tower or $350 per square foot for 40-storey condominium highrise.
All new hospitals in B.C. are planned to a LEED (Leadership in Energy and Environmental Design) Gold standard.
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