The COVID-19 pandemic has strangled B.C.’s once full-throttle private construction industry, but, with ironic timing, it is a multibillion-dollar hospital construction program that may salvage an industry that accounted for nearly a fifth of the provincial GDP in 2019.
B.C. housing starts have already dropped 30% from last year, and Metro Vancouver condo launches have plunged 75%.
The COVID-19 crisis may also topple plans for up to five new Vancouver office towers that were to start construction this year and next.
“Few office tenants are looking to move into new space, and many want to reduce short-term costs,” commercial agency CBRE cautioned in a second-quarter report on Metro Vancouver’s office sector.
The result is that 500,000 square feet of unwanted sublease space has been shoved back onto the market, nearly doubling the downtown vacancy rate to 4% within the last quarter alone, CBRE noted.
The Business Council of BC forecasts that construction spending could drop as much as 12.8% this year from the $21.7 billion level of 2019, if COVID-19 restrictions continue into the fall. But, as it has with tenants and workers blindsided by COVID-19, government spending could sustain B.C.’s construction industry as it battles through the pandemic.
The B.C. Ministry of Health will spend at least $4.4 billion over the next three to five years on 13 major hospital construction projects and upgrades, according to B.C. Finance Minister Carole James.
New hospitals are by far the most costly construction project. According to the 2020 Cost of Construction Guide from Altus Group, a new Metro Vancouver hospital costs an average of $888 per square foot to build, compared with $400 a square foot for a Class-A 30-storey office tower or $350 per square foot for 40-storey condominium highrise.
All new hospitals in B.C. are planned to a LEED (Leadership in Energy and Environmental Design) Gold standard.
Construction on some of the big hospital projects will start this year, including the $1.9 billion new St. Paul’s in Vancouver, and most will be underway within 24 months.
The new St. Paul’s Hospital, operated by Providence Health Care (PHC), will be built on an 18.4-acre site on False Creek Flats bought for $45.5 million through a public-private partnership.
St. Paul’s main building will be an 11-storey acute care hospital; other buildings will house primary care, outpatient and specialty clinics, research programs, health-care technology, biomedical and life sciences businesses.
Shortlisted contractors for the new St. Paul’s are EllisDon Infrastructure Healthcare and the PCL Team. The winner will be named “later this year,” according to government statements.
In Richmond, a new nine-floor acute care tower at Richmond Hospital will be larger than envisioned two years ago, with “several hundred million dollars” added to the original budget, Premier John Horgan announced July 2.
The tower was originally announced two years ago, but B.C. Minister of Health Adrian Dix couldn’t provide even an approximate budget for the new hospital tower at the July 2 announcement. He said the final budget would be released in September. A call for bids will follow, and construction could start late next year. The new tower is expected to be completed by 2024 or 2025.
Nelson Kwan, chairman of the Richmond Hospital Foundation board, pointed out the need for a new hospital has been on their radar for more than a decade. He added that his foundation has raised 88% of its goal of $50 million for the new tower.
In Burnaby, the first phase for a $1.3 billion expansion of the Burnaby Hospital was announced June 25.
The cost for the first phase of work totals $413 million, according to Partnerships BC. It includes design and construction of a new six-storey patient tower that will cover 130,000 square feet.
Three teams have been shortlisted to participate in the competitive selection process to design and build the new campus. Request for Proposal (RFP) materials were issued to EllisDon Design Build Inc., Ledcor Design-Build (B.C.) Inc. and Canadian Turner Construction Company Ltd.
The RFP process will determine which of the teams Fraser Health selects to lead the design and build this and future phases. The successful proponent will be identified in May 2021, said Fraser Health.
A new hospital has been confirmed in Surrey. Announced last December, only the site has so far been chosen. It will be built in Cloverdale beside the Kwantlen Polytechnic University campus at 5500 180 Street. The new hospital will include an emergency department, operating rooms and diagnostic services and inpatient and outpatient services, according to a B.C. government release.
A business plan is now being formulated, but as of July 8, no official budget or timeline for construction had been announced. •