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Construction cost escalation in the GTA: Past, present, future
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Date: August 22, 2022
Name of podcast: Altus Insights Podcast Series
Episode title and number: Construction cost escalation in the GTA: Past, present, future
Episode summary: Raymond Wong sits down with David Schoonjans, Senior Director in Altus Group’s Cost & Project Management business unit, to discuss cost escalation in the GTA. In this episode Ray and David break down the drivers of cost escalation, how developers and lenders need to adapt to mitigate risk in the current cost escalation environment, and what the future potentially looks like for construction costs in the near and mid-term.
Mentioned in this episode:
Panelists in this episode:
- David Schoonjans is a Senior Director at Altus Group and currently leads the Cost & Project Management business unit’s Business Intelligence group. David and his team are responsible for leveraging systems and technology to aggregate and anonymize structured construction data utilized by the business unit to provide cost estimating, loan monitoring, and project management services for approximately 1,300 engagements across Canada annually. Databases managed by David’s team currently include thousands of projects, representing several hundred billion dollars of construction value.
- Raymond Wong is the Vice President of Data Operations for Altus Group’s Data Solutions team. Overseeing 60+ researchers across Canada, Ray’s primary responsibility is to ensure data collection is all encompassing, reliable and accurate and that it adheres to the Altus Group data governance guidelines. Ray works closely with both internal and external clients to ensure the information meets their needs and that it is both accurate and timely. He also regularly presents on key market trends to clients and at industry events.
Key topics:
- 00:46 – Introducing David Schoonjans
- 02:56 - Where are construction costs moving to?
- 05:59 - How do developers reconcile their sales prices from 2-3 years ago with today's construction costs?
- 07:57 – How is Altus' cost escalation index helping developers mitigate project risk?
- 10:17 – Approach to addressing the "known unknowns" in cost forecasting
- 11:55 – How has the approach to building pro formas needed to change compared to 3-5 years ago?
- 14:27 – How have lenders been impacted with cost and interest rate changes?
- 16:00 – What factors should developers/owners look at to mitigate cost escalation risk?
- 20:31 - Is there a short-term relief for developers on construction costs?
- 22:40 - Forecast for construction costs over the next 2-3 years
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