b'PRESIDENTS MESSAGESURVIVAL OF THE FITTESTC anadas construction sector iswe can agree the GTA has been an expected to recover from a 3.1-per- abnormally robust market for a very cent output decline in 2024,long time. What cant be explained is growing at an average annual rateour apparent disregard for supply and of 2.2 per cent from 2025 onward. Thatsdemand economics. Margins typically the big picture story, and the growth willincrease in a busy market, but the GTA be driven by government investmentshas been and continues to be the single in transport, renewable energy, healthmost competitive market in Canada. I care and education. Economists alsocannot explain why, but it does suggest predict a gradual recovery in residentialGTA contractors have fewer reserves than construction, and that may well be true,we would have if margins and volumes had but the skeptic in me isnt convinced.been in sync during the boom. Residential construction in the GTA may also be an anomaly because such a highI am certainly not an expert, but it percentage of our local market is high rise.does feel to me like a great many local That also explains why GTA residentialcontractors are undercapitalized for the outputs in 2024 declined at nearly fivechallenges that lie ahead. Is now not the times the blended national average. time we should be investing in productivity tools to remain competitive in a shrinking In the last issue of Builders Digest, I spokeconstruction market? And do smaller, more of my uncertainty around the collectivespecialized contractors not need to invest impacts of high inflation, high interestin resources to facilitate diversification rates and high debt-to-GDP ratios despitewhen their bread-and-butter clients optimistic reports that all three are ingenerate fewer project opportunities? decline. The good news is inflation is now lower and arguably more stable andPerhaps I am nave, but I do take calls from interest rates are indeed coming down.small contractors every day who express Our enormous debt burden in Canada is agrave concern about their wherewithal problem not easily fixed, but the upcomingto survive a long and slow recovery. It is federal election may help turn thingsthe HR residential market that concerns around. This bodes well for Canada butme most because HR developers are not does not account for the nuances of ourexpecting a recovery in 2025. By extension, unique Toronto market. other sectors in the GTA are likely to see increased competition. During the boom, the GTA accounted for upwards of 58 per cent of all theThe bottom line is that the GTA will not residential construction in Canada andrecover as quickly in my view as we was arguably the busiest constructionwould have hoped. My guess is that itll market in North America. At a minimum,be early- to mid-2026 before the GTA 6Quarter 42024 BUILDERSDIGEST'