2013 Saskatchewan Real Estate Forum Managing Construction & Developm ent Costs in the Saskatchew an Market Presented by: April 30 th , 2013 Dave Gurnsey 1
Agenda 1. Where are we compared to last year? 2. Where are costs going? • Materials • Labour 2
Canada I nput Cost I ndices: Last 2 4 Months Material, Union Wages and Composite Indices 2001 Annual Average = 100 140 135 Composite Wages Materials 130 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 3 Source: Canadata Construction Cost I ndex – Canada (2001-2012) Updated: Jan 25, 2013
W estern Canada / Prairies: Major Centre Cost Com parison Western/Prairies (Indexed to Calgary) 1. Calgary 100 2. Edmonton 98 3. Regina/Saskatoon 105 4. Winnipeg 108 4
2 0 1 2 Canadian Put-I n-Place Construction % by Province Construction by Region (2012) Total % of Total Atlantic 16,398 6% Québec 49,833 18% Ontario 75,764 27% Manitoba 8,284 3% 5% Saskatchewan 14,220 Alberta 78,572 27% BC & Territories 41,123 14% CANADA 284,194 100.0% (Current Canadian $ Millions) 5 Source: Reed Construction Data – October 2012
2 0 1 2 Canadian Put-I n-Place Construction % by Sector 2012 Totals Residential ICI Engineering Total Atlantic 37% 21% 42% 100% 48% 20% 32% 100% Québec Ontario 50% 24% 26% 100% Manitoba 36% 22% 42% 100% Saskatchewan 23% 14% 63% 100% 18% 11% 71% 100% Alberta BC* 36% 16% 48% 100% CANADA 36% 18% 46% 100% *BC includes Yukon, NWT and Nunavut 6 Source: Reed Construction Data – October 2012
Material Prices COPPER - COMEX high grade - Comex, 1st most active close (¢US/pound) (January 2000 – January 2013) 7 Source: American Metal Market Updated: January 14, 2013
Material Prices North American Rebar Price (ex-mill $US/Tonne) August 2006 – November 2013 8 Source: MEPS.CO.UK *November 2012 – October 2013 Forecast by MEPS.CO.UK Updated: January 14, 2013
Material Prices Lumber and Timber Price Index – Canada (2001 = 100) January 2001 – November 2012 130 With the return of a demand-driven wood products 120 market in 2012 – due to rapidly increasing housing starts in the U.S. – it is now forecast that lumber and panel prices will move to new highs in 2013 and record 110 highs for lumber in 2014. - International Wood Markets Group 100 90 80 70 60 Jan-01 Oct-01 Jan-02 Oct-02 Jan-03 Oct-03 Jan-04 Oct-04 Jan-05 Oct-05 Jan-06 Oct-06 Jan-07 Oct-07 Jan-08 Oct-08 Jan-09 Oct-09 Jan-10 Oct-10 Jan-11 Oct-11 Jan-12 Oct-12 Apr-01 Jul-01 Apr-02 Jul-02 Apr-03 Jul-03 Apr-04 Jul-04 Apr-05 Jul-05 Apr-06 Jul-06 Apr-07 Jul-07 Apr-08 Jul-08 Apr-09 Jul-09 Apr-10 Jul-10 Apr-11 Jul-11 Apr-12 Jul-12 9 Source: Statistics Canada (Cansim Table 329-0061) Updated: January 23, 2013
Construction Cost Trends Division Trend Comments 1 General Conditions & Fees Moderate increase due to competition for experienced personnel. 2 Site Work & Earthworks Generally trending downwards based on oil pricing. Concrete supply prices are relatively stable with typical increases, but formwork and = 3 Concrete reinforcing is slightly higher based on demand 4 Masonry = Material prices are stable. Relatively stable with flat material prices being offset by increasing labour costs due to 5 Metals = competition for labour, although this may be moderating depending on the oil price. 6 Carpentry Raw lumber prices are above average and we anticipate this to peak in the summer of 2013. 7 Thermal & Moisture Protection = Prices are not expected to change 8 Doors & Windows = Domestic manufacturers are very competitive. No significant increase expected. No significant increases are expected, however could vary depending on US housing market = / 9 Finishes gypsum demand. 10 Specialties = Generally stable. Competitive market. There is generally increased competition in the electric / electronic 11 Equipment (Appliances) consumer market. 12 Furnishings = Generally competitive. 13 Special Construction = Generally stable. Price increases are expected due to a combination of increased labour costs due to skilled = 14 Conveying Systems (Elevators) labour shortages and material cost increases. Moderate increases due to demand for skilled labour and material increases. The increase is 15 Mechanical dependent on the oil price and resultant activity in the oil sands. Moderate increases due to demand for skilled labour and material increases. The increase is 16 Electrical dependent on the oil price and resultant activity in the oil sands. 10
Labour Market Rankings Trades and occupations 2013 2014 2015 2016 2017 2018 2019 2020 Construction managers 3 3 3 3 3 3 3 3 Crane operators 3 3 4 4 4 3 3 3 Electricians (including industrial and power system) 3 3 4 4 4 4 4 3 Plumbers 3 3 3 3 4 4 3 3 Sheet metal workers 3 3 4 4 4 4 3 3 Steamfitters, pipefitters and sprinkler system installers 3 3 4 4 4 4 4 3 Trades helpers and labourers 3 3 3 3 4 4 4 3 Qualified workers are available in local markets. Excess supply is apparent. Workers may move to other markets 1 Qualified workers are available in local or adjacent markets. 2 Qualified workers in the local market may be limited by short-term increases in demand. Established patterns of recruiting are sufficient. 3 Qualified workers are generally not available in local and adjacent markets. Recruiting may extend beyond traditional sources and practices. 4 Qualified workers are not available in local or adjacent markets. Competition is intense. 5 11 Source: Construction Sector Council February 2013
Sum m ary 1. Construction costs have risen slightly in 2012. 2. We can expect further increases in 2013, with lumber being the most significant material factor and labour in general increasing. 3. No significant differences between Regina and Saskatoon. Labour market in Regina is a bit tighter but not likely enough to be significant. 4. Oil and Gas sector uncertainty, with limited pipeline capacity threatening oilfield activity and reducing profitability of oil companies. 12
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