UDI’s 2023 housing industry forecast: Panellists share their outlook

The Urban Development Institute’s (UDI) January 2023 forecast, held on Jan. 26, brought together four respected industry leaders who shared their projections covering all sectors of the housing industry for the year ahead.

Panellists were Tim Grant, president of PCI Development; Beth Berry, vice-president of industrial development at Beedie: Rick Ilich, CEO of Townline; and Jennifer Podmore Russell, vice-president advisory at rennie. Avtar Bains, president of Premise Properties, and Anne McMullin, UDI’s CEO and president, shared moderating duties.

Inflation and interest

Inflation will remain the most important metric for predicting rate trends according to Tim Grant. While he anticipates a return to more normalized rates, he cautioned there are still forces at play that may make inflation more difficult to keep under control, including the move away from globalization toward domestic production.

However, Jennifer Podmore Russell said it’s employment that’s “the big thing we need to focus on in this region.” Her research, current as of that morning, indicated there are some 135,000 unfilled jobs in BC and only 122,000 people qualified to fill them. And with immigration—both international and from other parts of Canada—remaining net positive, the question remains how the construction industry can provide sufficient housing.

Skilled trades and medical/health were the two runaway sectors the audience said the federal government should emphasize when considering applications for immigration. In a live poll, each garnered just under 50 per cent, leaving engineering, software and technology, academia, and early education/childcare providers in the dust.

The cost of building

Although Anne McMullin noted she’s heard anecdotal evidence that construction prices may be softening, Tim Grant felt many projects remain unviable because labour constraints and supply chain challenges probably won’t be going away any time soon.

Beth Berry reported that Beedie’s construction costs have gone up 20 to 30 per cent since 2021 which, combined with rising interest rates, has created an almost 300 per cent increase on the company’s pro formas.

Despite cancellations and delays, Rick Ilich predicted the industry will see a noticeable pullback on construction costs by the fourth quarter of 2023, possibly earlier.

Where will people live?

“We’ve established priorities for immigration of 500,000 permanent residents per year, and we know we’re growing by 1.25 million people in terms of visa issuances,” Jennifer Podmore Russell noted, adding that of the more than 400,000 international student visas issued in Canada last year, 100,000 were for BC. While those numbers are necessary to keep Canada vital and vibrant, questions such as how to provide adequate housing, including establishing workforce housing in urban centres, were asked.

“The predicament we’re in with housing has been 30 years in the making. You didn’t need to be a rocket scientist to see it coming,” said Rick Ilich.

First Nations collaboration opportunities

Jennifer Podmore Russell sees collaboration between the development community and First Nations who are “willing and able to take control of the permitting processing” as a triple win. In 2022, such collaborations resulted in 9,800 rental homes starts, a 48 per cent increase over the previous year and the largest number of rental starts since the 1970s. She’s also a fan of the way such collaborations result in communities designed with a different, more holistic mindset that creates flourishing, vibrant neighbourhoods.

The new office culture

And finally, what of office space? The live audience poll indicated more than 80 per cent anticipated they would increase the number of employees this year, however 37 per cent saud they would decrease their office space compared to the 44 per cent who expected their stick’n’bricks office footprint could rise.

Beth Berry said Beedie has always made the in-person office culture a priority—even during the pandemic. Her company invested heavily to create spaces that encourage people connect as friends in addition to colleagues.

Tim Grant agreed. “You don’t have to go into the office anymore to perform similar functions, but we believe there is a place for the office in good corporate cultures. People are relationship-driven and working exclusively over Zoom isn’t the same. In the future, we believe the world will demand a new flexibility. It might look and feel different, but the office has to be a place people want to come to, a place you’re proud to have clients come to.”

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