Day Two of CanaData 2020 focused on the role of demographics in the economy and how it affects the construction industry, with moderator and speaker Andrew Ramlo of Rennie Consulting, along with Peter Norman and Ray Wong from Altus Group and Abacus Data CEO David Coletto. Each speaker had a different perspective on how technological change, population growth, COVID-19 and generational needs affect labour, real estate and the overall economy. Here are some highlights.
Altus Group vice–president of data operations and data analytics Ray Wong looked at how COVID-19 has impacted the Canadian commercial, retail and industrial market.
- Key takeaways are that workplace dynamics are shifting and the employee has to come first, rapid changes in retail and industrial demand is strong and getting stronger.
- 2020 is a year of evolution accelerated. Changes in the office market involve work from home, so will we need office space? We were already seeing this trend before COVID–19.
- The actual footprint of the office will decrease. This is already happening in retail.
- We’re starting to see an impact on sublet rates, and the majority of that is in downtown cores.
- There’s more space available but it’s not ideal space for tenants.
- Pre-leasing activity is still strong, but there will be a challenge with older offices being transformed to other uses.
- Forecast sees rising office vacancies in downtown Vancouver. It will be interesting to see if work from home means a shift to the suburbs, but we haven’t seen it yet. “Everything is on hold” and the same trend is happening in downtown Toronto.
- Retail sales are up but starting to pause and retail rents are expected to continue to fall.
- Industrial availability remains tight and new construction remains in short supply.
Altus Group vice–president and chief economist Peter Norman’s talk was titled Housing Choices by Key Demographics: Pandemic-Induced Shifts Ahead, but his key takeaway was how quickly the economy is recovering from the COVID-19 dip earlier in the year.
- There’s been a nationally sharp decline in the second quarter, but the July and August numbers are back up and the third quarter might be strongest ever.
- In the GTA, sales are back and a big part of the story is that interest rates are “extraordinarily low.”
- In the GTA, there’s a sorting happening, a real shift out of the city of Toronto and into surrounding areas and demand for single family housing relative to condos or other denser housing.
- There will be short term effects such as skyrocketing prices for single family and flat and slightly down for apartments.
- How does the pandemic affect immigration growth factors going forward? There’s been a 30 to 40 per cent decline in international immigration and an increase in migration out of the GTA and into surrounding areas.
- The worst-case scenario is a much sharper decline in international migration over the next year, but even then it would eventually go back to normal levels.
Rennie Consulting vice-president Andrew Ramlo took a look at the demographic “big picture” for Canada including fertility, the impact of COVID-19 and how Canada will look in terms of population in the next 20 years.
- In the early ‘80s a typical boomer was in their 20s and forming families and households of their own. The typical boomer is now in their mid to late 50s and possibly contemplating early retirement.
- In a much different context, the leading edge of the boom is in their seventies and edging towards mortality.
- In 1971, there were six people for each working age senior, by now it’s down to 2.5 and that’s why the government encourages immigration.
- Fertility rate is currently 1.5 kids per woman and that pales in comparison of post-Second World War levels.
- Fertility is expected to remain relatively low.
- There’s been speculation that COVID-19 will cause a baby boom, but economic analysis shows some upward ticks in previous crises but typically challenging economic times mean declining fertility rates in the short term as well as a longer-term bounce back.
- COVID-19 is not having much of a total impact on life expectancy, but definitely has an impact from age 65 onwards.
- From an economic perspective, COVID has been called the “Great Suppression” and there’s expected to be a seven to eight per cent contraction this year but 5.1 bounceback next year.
- Canada in 2041 will have immigrants as a higher number of the population and could be 25 to 30 per cent of population by 2041 compared to 20 per cent today.
The final session of the day was with Abacus Data CEO David Coletto who examined how millennials and Generation Z are affecting shifts in technology adoption as well as recruitment and real estate in his talk titled The Big Reset: Generational Change + Technological Change = Changing behaviours, expectations and circumstances.
- Eighty-three per cent of Canadians think the pandemic means we need to rethink how we work and live.
- There will be more flexible work arrangements, touchless experiences, more digital first and home-based work. These were all emerging trends pre-pandemic.
- Millennials/Gen Z are the most diverse generation in history, most digital savvy, social media savvy and most educated in history. Also, one of first two generations in history where women have more education than men.
- The dream of home ownership is delayed for Gen Z and millennials by five to 10 years from the previous generation.
- Gen Z was raised with an emphasis on the importance of self-esteem, which means very high expectations, a desire to be good, and “immense pressure from parents for us to succeed.”
- Technology means there’s been a decline in deference in authority, instant reaction, amplification, and a sharing economy.
- For those under 40, Facebook and Instagram is their primary news source.
- The preference post-COVID to work from home has risen. Whether a millennial or a 55-year-old, we all know how to use this technology and there’s no more reason to say we can’t do this in future.
- What this means for construction is there will be struggles to recruit young people, especially since you can’t compete on having to show up on the worksite as opposed to working from home.
Journal of Commerce staff writer Russell Hixson will have comprehensive coverage of the presentations given during Day Two of CanaData in an upcoming article. Our next series of sessions is tomorrow and will focus on economics with ConstructConnect chief economist Alex Carrick, Export Development Canada vice–president and chief economist Peter Hall, Pinsent Masons LLP global business consultant Graham Robinson and Bank of America metals and mining equity research analyst Timna Tanners.