Ontario Construction News staff writer
Some sectors within Canada’s construction industry will thrive, even as the pandemic disrupts and causes pain in others, says Jay Bowman, managing director of research for North Carolina-based consultant and investment banker FMI Corporation.
While residential construction spending may decline by upwards of 20 per cent in the next couple of years and there will also be slowdowns in non-residential building, especially for office towers, there will be opportunities elsewhere in the market, Bowman told Procore’s Canadian vice-president Jas Saraw in a recorded interview for Procore’s Groundbreak virtual conference last Tuesday.
“I think one thing that’s important to keep in mind is that regardless of the economy we find ourselves in is this concept that bull markets and bear markets coexist at all times,” Bowman said.
“And we can go back to any period of economic expansion, or even economic contraction and we find, whether it’s certain markets or geographies that are either growing or declining,” other segments or types of construction are going in the other direction.
In other words, while many segments will suffer in the pandemic environment, some are likely to thrive.
Bowman cited six sectors likely to grow in the near future. These include biotech and the life sciences, “reshoring” of materials and activities that had been transferred overseas and the rapid growth of e-commerce and related developments in warehousing and cold storage. Other growth segments include data centres, intelligent transportation systems, and new energy generation sources, notably wind and solar power.
He said the pandemic will probably lower requirements for central cityd office construction, though it is uncertain how much of the “work at home” required by the pandemic will become permanent.
Bowman said there are signs of a change “towards a more distributed type of model” from commuting into urban centres – but on the other hand, people have “short memories” and often revert back to their old ways once they can.
“I think what you’ll probably see and this is probably taking a little bit of the easy way out, but I think its going to be a combination of the two. And if you were to ask me, I think over the next say, a year or two years, what we’ll eventually see is probably 25 per cent of office workers will never return. They’ll be completely remote, because in most cases a lot of companies who used a lot of office space are finding a lot of ways to be more efficient.
“There’s a profitability aspect to it, obviously, of having less (space). So I wouldn’t be surprised if 25 per cent is never returned. Another 25 per cent will likely come in say one or two days a week.
“They will still require some place to be because team meetings and other work just has to be done in an office environment, which leaves roughly 50 per cent that will return on a full-time basis.
Bowman said he is more optimistic about Canadian public infrastructure project opportunities than in the US, in part because of well-developed public/private/partnership models here.
He agreed with Procore’s Saraw that there the construction industry is ready for technological change, with contractors finding ways to manage and adapt to large volumes of data that can increase efficiency and profitability.
“I think it ‘s important to look at how we do things in operations, design, delivery, construction, whatever it may be, and really challenge some of the long held assumptions, to say: ‘Well, what can be done differently – whether we do it or one of our competitors does it.”