b'PRESIDENTS MESSAGEOUTLOOK 2025CLOUDY WITH A CHANCE OF RAINI n almost every construction industryOn the contrary, proforma pressures are outlook I attend, the forecaster beginscausing nearly insurmountable margin their monologue with a description oferosion, and residential developers, the underlying economic landscapedespite their legacy of successes in recent and a prediction about the way forward.years, are typically not REITS or pension That makes sense, I guess, unlesslikefunds with deep pockets. meyou believe an economist is someone who does precision guesswork based onAt the national level, construction sector unreliable data provided by sources ofoutput decreased 3.4 per cent in 2023 and questionable knowledge. Either way, in theforecasters predict similar outcomes as language of a layperson, what I am hearingwe close out 2024. Bear in mind, however, is cloudy with a chance of rain. that residential outputs declined more than 15 per cent annually over the same period, The weather analogy here is intentional.and Toronto, Vancouver and Montreal were Economists who I follow are genuinelythe hardest hit, in that order. Economists uncertain about the collective impactstell us long-term growth is assured, but of high inflation, high interest rates andthey also promised post-pandemic recovery high debt-to-GDP ratios despite optimisticwould be rapid and it isnt. reports that all three are in decline. Can we keep lower inflation stable, forPerhaps the most telling metric for example, if the Bank of Canada continuesconstruction activity is the demand for to reduce interest rates? Can governmentsskilled labour. Canada-wide, we are in the at every level afford to keep their electionearly stages of a potentially catastrophic promises? And more to the point, whatskilled labour shortage that Buildforce happens to the economy if they dont?Canada predicts by 2030 will be measured Again, what I hear is cloudy with a chancein the hundreds of thousands. Assuming of rain. that is true, how is it that Toronto subtrades are so starved for workNow lets talk a little about our localDivision 2 trades in particular? What that construction market. Gone are the days ofspeaks to is our reliance in Toronto on the 242 tower cranes in Toronto for at least theHR residential sector that in recent years foreseeable future. Busy, yes. The busiesthas catapulted us into the stratosphere in high-rise market in North America, maybe.construction activity terms. A closer look at our unique interest-rate-sensitive high-rise residential market,Therein, however, lies the rub. There is still however, will reveal some cracks that wontan overwhelming demand for housing,be easily fixed.of courseaffordable housing inparticularbut making the numbers work Insolvencies now measure in the highis no easy task, and nominal increases 20s, and we are not out of the woodsin commercial and industrial activity is just because inflation is seemingly undersimply insufficient to change the tide. I am control or because the Bank of Canada hashopeful that things will change one day reduced interest rates by 100 basis points.soon. Im just not hearing reliable forecasts 6Quarter 32024 BUILDERSDIGEST'