Market Trends of Canada Commercial Construction Industry
Office Building Construction is Expected to Dominate the Market
Canada is home to some of the world's biggest and most successful companies, so naturally, there is high demand for office space. The volume of office space under construction in Canada increased between the third quarter of 2020 and the third quarter of 2021. As of the third quarter of 2021, over 17.3 million square feet of office space had been built in Canada. In 2021, the value of office real estate investment in Canada is expected to reach 7.4 billion Canadian dollars (USD 5.57 billion).
Office buildings are generally grouped into three classes: A, B, and C, which are dependent on factors such as location and facilities. Units that provide premium facilities are considered Class A. The net asking rent of a Class A office space in Canada is around 20 Canadian dollars per square foot.
During COVID-19, Vancouver had the second-lowest vacancy rate, whereas Montreal had the highest among the cities in the region. Vancouver has one of the most expensive housing markets globally, yet demand for office space is lower than in Toronto. Ontario generates a large portion of Canada's GDP, which means that office space is vital for the region. Downtown Toronto had significantly more available office space than Midtown Toronto, but both submarkets had similar vacancy rates.
Currie Barracks Mixed-use Development project construction work started in Q4 2021 and is expected to be completed in Q4 2024. The project aims to provide a community with residential, commercial, and retail facilities to house 11,000 residents. It is the final phase of a three-phase closed Canadian Forces base redevelopment.
Moreover, the Metrotown Property Redevelopment Project involves the construction of seven multipurpose facility towers on a 3.60-hectare site area on the south side of Kingsway at Nelson Avenue, next to Metropolis in Burnaby. The project aims to provide a diverse range of modern amenities, including residential, hotel, retail, commercial, and innovation space facilities, under one roof for people in the city.
The 1067 Yonge Street Office Complex project involves the construction of a 1,437 m2 four-story office complex in Toronto, Ontario, Canada. The 3700 Gilmore Way Expansion Project involves the construction of three- and five-story office buildings on 5 ha of land in Vancouver, British Columbia, Canada. Finally, the QRC West Phase II Office Complex project involves the construction of an 8,134 m2 seven-story building in Ontario, Canada.
These commercial office building projects will contribute to the industry's growth in Canada over the next few years.
Raise in Demand for LEED-certified Commercial Construction Buildings
According to the Canada Green Building Council (CAGBC) data, Canada ranked second globally on the annual list of the Top 10 countries and regions for LEED in 2021. In 2021, Canada certified 205 projects, representing more than 3.2 million gross square meters of LEED space.
In the construction of a green building, there is a requirement to get LEED certified, which operates in different cities depending on the code, material, and standards to be used in the construction. There are levels of LEED Certification that help the construction industry enhance the ability of buildings to perform and maintain environmental impacts that positively affect the health and comfort of the occupants. As of November 2022, there were 4,336 LEED-registered building projects in Canada. Offices and mixed-use offices are the types of spaces with the highest number of certifications. At that time, there were only 271 multifamily residential projects in the country certified by LEED.
A few examples of LEED-certified buildings in Canada include the three buildings at Purdy's Wharf in Halifax. The office complex was the first in Atlantic Canada to receive LEED Gold certification and uses seawater to chill the buildings' cooling water. And the first office building in Montreal to have LEED Platinum status, the Deloitte Tower, uses grey-tinted glass with a special coating to allow for more natural light and to control the heat inside the building. This means a significant reduction in energy consumption.
Moreover, LEED helps investors measure and manage their real estate performance. It allows investors to implement management practices that prioritize building efficiency, decrease operational costs, and increase asset value. Hence, the demand for LEED-certified commercial construction buildings in Canada is expected to increase over the forecast period.
