BuildForce model projects Ontario construction demands to remain elevated into 2029
The latest labour market information report issued by BuildForce Canada for Ontario projects that construction demands will remain elevated across the province to at least 2029.
Activity in the province’s residential sector slowed in 2023 and is projected to do so again in 2024, under pressure from rising interest rates and increasing construction costs. The outlook calls for the sector to bounce back after 2025 as interest rate pressures ease and demand for new homes in particular is spurred by high levels of immigration and public-policy imperatives to build more units.
Renovation expenditures, meanwhile, are projected to grow continuously through 2033 as consumers choose to remain in their homes and prepare to potentially age in place.
Meanwhile, activity in the non-residential sector has continued a strong growth trend that tracks back to before the COVID-19 pandemic, and which shows no sign of slowing until at least the late 2020s – and, says BuildForce, that trend accounts for just the $180 billion worth of projects that are currently approved or planned for construction. Proposed activities, like work in the Ring of Fire region in the North, could boost those trends further.
All regions of the province have at least some major projects underway at the moment, including subway and light rapid transit construction and nuclear refurbishments in the Greater Toronto Area, light rail in the Eastern and Central regions, mining activity in the North, and electric vehicle manufacturing and automotive retooling projects in the Southwest. These projects wind down in the latter years of the forecast as these projects reach peak activity and demands start to subside.
The outlook sees construction and maintenance employment rising to a peak in 2028. Thereafter, residential construction employment contracts slightly, while non-residential employment is largely sustained. By 2033, residential sector employment is expected to grow by 6% above 2023 levels, while non-residential employment is expected to grow by just over 10%.
BuildForce also notes that the numbers in its projections are based on existing known demands only. They do not take into account public-sector initiatives to address housing affordability challenges, nor the anticipated increase in demand for construction services related to the retrofit of existing residential, industrial, commercial, and institutional buildings to accommodate the electrification of the economy.
The organization plans to address both scenarios in subsequent reports.
“Ontario’s construction and maintenance sector is poised to see significant growth into the middle years of the forecast period,” said executive director Bill Ferreira. “Its challenge will be recruiting workers to address the demands created by such growth. With both the residential and non-residential sectors poised to grow well into the late 2020s, and many workers exiting the industry due to retirement, many trades and occupations could experience strained conditions. What’s more, opportunities for interregional mobility will be limited as most of the province’s regional markets will see high levels of demand.”
One of the challenges for Ontario is that its five component regions each feature their own labour market conditions, and can create sometimes competing demands for workers.
Central Ontario, for example, has seen significant growth in recent years that has been driven by out-migration from the Greater Toronto Area. Residential investment levels declined in 2023 and are forecast to do so again in 2024 as interest rates cool consumer spending on new housing construction and home renovation activities. The outlook calls for growth after 2025 as builders respond to demand created by strong migration. Investment in the non-residential sector reaches a peak in 2029 with work on light-rail transit, roads, highways, and bridges, and major healthcare projects – many of which are located in Hamilton. Employment in both residential (+10%) and non-residential (+13%) construction is projected to grow across the forecast period.
Eastern Ontario’s construction market is dominated by several major projects across the engineering-construction and the industrial, commercial, and institutional building sector. Key projects currently underway include the light rail line in Ottawa, high levels of investment in roads, highways, and bridges, and an extensive portfolio of work being driven by the federal government. Later years call for the addition of major hospital projects in Ottawa and Kingston, as well as sustained activity across public-administration buildings. The residential sector stepped back from the peak volume of housing starts reported in 2021. Housing starts are projected to return to growth between 2025 and 2028, with demand strongest among multi-family units. Total construction employment is expected to reach a forecast peak in 2028.
The Greater Toronto Area’s construction market continues to be driven by a series of large-scale public-transportation, nuclear refurbishment, new hospital, and other government building-restoration projects. These combine to create strained labour market conditions across most of the region’s non-residential trades and occupations. The outlook for the region’s residential sector sees investment levels step down for the third consecutive year in 2024 as elevated interest rates curb consumer demands. The sector returns to growth in 2025 and maintains an upward trend into 2028. Construction employment in the GTA peaks in 2028 and contracts in later years. By 2033, residential employment grows by 4% above 2023 levels; non-residential employment increases by 14%.
The construction market in Northern Ontario is heavily influenced by activity in the mining and utility sectors. Several major electric-transmission projects reached completion in 2023, causing non-residential activity to decline slightly. The outlook calls for another contraction in 2024 before growth resumes between 2025 and 2027 with the start of work on key projects such as the Thunder Bay Correctional Complex and the Weeneebayko Hospital. Regional residential construction investment levels are driven by renovation activity. The segment peaked in 2021 and is projected to continue to fall across the remainder of the forecast period due to weaker job and income growth. New-housing activity is expected to return to an upcycle by 2025, in line with demand for new construction across all unit types. Construction employment is expected to trend up to 2027 before generally cycling down to the end of the forecast period.
Southwestern Ontario has been supported by a strong housing market in recent years. Although residential sector activity declined in 2023 due to rising interest rates, growth is projected to resume again between 2025 and 2028. The non-residential sector has seen steady growth since 2016 with ongoing work on key projects such as the Bruce Power nuclear refurbishment, the Gordie Howe International Bridge, and in the automotive sector. Investment levels are expected to moderate in the short term with the conclusion of some of these projects. They rise again in 2025 with the start of work on the Volkswagen EV battery plant and accelerate strongly into 2026 and 2027 as core construction commences on the Windsor Acute Care Hospital. Employment is projected to grow strongly in both sectors through 2033.
High levels of demand across the region aren’t the only challenge the sector faces. Its workforce is aging. More than 89,300 workers, or 19% of the current labour force, are expected to retire over the next 10 years. Added to the demand created by growth, hiring requirements will rise to 141,200 over the forecast period.
At the same time, the industry is projected to recruit approximately 105,700 new entrants under the age of 30 to offset some of this loss. Even still, the workforce is projected to see a gap of 35,500 workers that will need to be filled from a variety of sources outside the existing labour force to meet demands.
BuildForce points to the need for the industry to bolster its recruitment among three traditionally under-represented in the province’s construction labour force: women, Indigenous People, and newcomers to Canada.
Approximately 77,700 women were employed in Ontario’s construction industry in 2023. That figure is an increase of over 7,000 from 2022 levels. Approximately 26% of these individuals worked directly in onsite construction, and as a share of the total 445,300 tradespeople employed in onsite construction professions in Ontario, women made up just 5%.
Meanwhile, the Indigenous population also presents recruitment opportunities for Ontario’s construction industry. In 2021, Indigenous workers accounted for 3% of the province’s construction labour force. That figure is slightly higher than the 2.5% represented in the overall labour force.
Finally, Ontario is expected to see elevated levels of immigration over the forecast period. This will make the newcomer population a key source of labour force growth. In 2022, newcomers comprised 27% of Ontario’s construction labour force, which is notably lower than the share of newcomers in the overall provincial labour force.
Ontario currently attracts 44% of newcomers to Canada.