Construction cost inflation stabilizing: RLB Report

International property and construction consultancy firm Rider Levett Bucknall (RLB) has released its latest Quarterly Cost Report, which provides a perspective on the North American construction industry in 14 key markets.

The latest RLB quarterly cost report indicates that the national average increase in construction costs was 1.11 per cent, which is similar to the previous two quarters.

“The construction industry’s resilience shines as we tackle market uncertainties with innovation, from stabilizing costs to embracing workforce development and technological integration,” said Paul Brussow, president of RLB North America.  “While challenges persist, including inflation, tariffs, and labor shortages, our focus remains on creating new solutions and opportunities that will drive growth and ensure our continued success.”

The report revealed that construction unemployment rate is 3.7 per cent, down .1 per cent in the same time period last year. Following a twenty-month period of decline, the Architectural Billings Index (ABI) is 50.3 and shows a balance between firms with increased and decreased billings

Tariffs on imports like steel, aluminum, lumber, and other materials have increased input prices. The report noted that while tariffs have had an impact, it was nothing compared to what inflation has done in recent years. Potential proposed additional tariffs on imports from Canada, Mexico, and China are more likely to worsen certain challenges, particularly for metals, plastics, and essential construction materials, potentially adding thousands to the cost of residential and commercial projects. Despite this, the construction industry has shown remarkable resilience in adapting to evolving challenges, and finding ways to deliver projects efficiently.

Research shows that Alberta’s economy is set to grow, driven by population increases and the Bank of Canada’s easing monetary policy. Improved borrowing costs, higher consumer spending, and firm employment growth support this trend.

Alberta’s real GDP is projected to grow by 1.8 per cent in 2024, aided by stable energy production and rising migration for affordable housing.

Housing construction has surged to 50,000 units annually, and Calgary saw a 31.9 per cent increase in building permits, totaling $798.4 million. The province also advances major projects like the $6.2 billion Green Line LRT.

In Ontario, building permits rose to $5.9 billion at the end of the third quarter of 2024. Bank of Canada rate cuts have boosted Toronto’s real estate market, with residential sales up 44.4 per cent year-over-year in the fourth quarter of 2024. The Ontario government plans $191 billion in infrastructure spending over the next 10 years, including major projects such as Highway 413, a Highway 401 tunnel feasibility study, new schools, and healthcare facilities.

To read the full report, click here.