b'CONSTRUCTION PRIORITIES: HIGH-RISE CONSTRUCTION CRISISfrom windows to curtain walls andTHE IMPACT ONArguably more concerning, however, is aluminium to glass. CONSTRUCTION LABOUR that workers leaving the industry now The collapse of the Greater Toronto Arealikely wont return when activity recovers, Adding to the bill are the currenthigh-rise industry is taking its toll onhollowing out the skilled labour pool municipal, parkland dedication andthe construction workforce. The Altuswhen it will be needed most.community benefits charges. TheseGroup estimates the high-rise sectors are all effectively a tax, says Murva,downturn will result in the loss orA LONG PATH TO RECOVERYnoting these charges combined withdisruption of over 40,000 constructionUrgent action is required to stabilize other taxes (e.g., HST and land transferjobs across the trades in the Greaterthe sector. Among the more immediate tax) can add up to approximately 30Toronto and Hamilton Area, and fewsteps, says Murva, is reducing or even per cent of the current cost to buildwill find their way into infrastructure orfreezing development-related charges high-rise multi-family residentialhealth-care projects. for the near future. After all, he says, buildings, depending on theIf a building doesnt get built, the municipality and the type of property.These are more than projections,municipality doesnt get the development Moreover, he adds, The parklandas layoffs have already begun andcharge. You may as well do a temporary dedication and community benefitsare anticipated to rise as previouslyfreeze on these development-related are assessed at approximately fourlaunched projects begin to wrap: Ascosts to help get things going, so that per cent of land value, and when landthese buildings that were started back infour years down the line, municipalities values go up, these charges increase2022 get finished, there are going to bewill get an increase in their tax base as well. lots of people coming off those projectswhen those buildings are finished.These factors and more makewith nowhere else to go. Mollenhauer emphasizes the need for financing increasingly difficult, therebyLabour costs are rising at the sameworkforce retention and immigration exacerbating the slowdown. Gonetime. Recent union negotiations havereformspecifically, pathways for skilled are the days that a developer opens aresulted in higher charge-out rates,workers in an industry that contributes sales centre and meets their financingwhich are spilling over to the non-unionsignificantly to Canadas economic thresholds, Mollenhauer explains.health. Aligning immigration policy with Historically, youd pre-sell about 80side, resulting in higher labour costslabour market needs is essential to per cent of the units [in a high-rise],all around. Combined with retirementsensuring the sector has the workforce it hit your financing trigger and move onand misaligned immigration policy,requires, he insists.with the project. A lot of that happenedMollenhauer says, The labour challenge quickly because investors flooded salesis a bigger challenge now than it everTorontos high-rise collapse isnt coming centres, and that group is gone. has been.its already here. And with recovery still years away, the construction community Purchaser defaults have compoundedRetiring talent, lack of work and risingis bracing for an industry that will pose the problem. Many who bought pre- labour costs wont do the constructionas much risk to their bottom line as it will construction units a few years ago arelabour pool any favours in the short term.to their workforce.facing capital losses of up to six per cent and are unable to close. Moreover, Murva adds, Lenders are reassessing unit values and finding them lower than the agreed purchase price. As a result, youve got to add more equity over and above the deposit if you want the lender to give you a mortgage.Certainly, says Mollenhauer, banks have grown cautious, with many rethinking what their thresholds should look like: Projects that had a pro forma based on $1,400 or $1,500 a foot are now seeing the market down to $400 a foot, and that makes lenders understandably gun-shy. All of those things collectively have caused this conservatismpredictably for banks.With defaults spiking and developers suing defaulting purchasers, theTOTAL BUILDING ENVELOPEbroader effect is only hurting the industrys odds of bouncing back. This,WWW.FLYNNCOMPANIES.COMin itself, is scaring potential buyers away from buying anything new.BUILDERSDIGEST Quarter 4202519'