Canada sees robust investment in manufacturing facilities and data centers: Report

The International construction market survey (ICMS) 2024 report from Turner & Townsend, revealed that the worldwide shift towards deglobalization and nearshoring of manufacturing is particularly impacting markets in North America.

According to the report, North American markets have dominated an international ranking of the most expensive places in the world to build for the second year in a row. The report also noted that the US’s economic resilience, strong construction activity, and stretched labour supply have led to cost escalation, and this is predicted to average 4.2 per cent across North America in 2024.

The report revealed that Canada is seeing robust investment in manufacturing facilities and data centers, with firms leveraging competitive rates on land outside of major metropolitan areas. The report also noted that Mexico is seeing new manufacturing investment based on ease of exporting to the US and Canada, but increasing activity is causing high inflation.

This pipeline of work is also contributing to increased concerns over reduced labour capacity across the Canadian construction sector, according to the report. Major infrastructure projects are competing for scarce resource, and insolvencies are impacting overall supply chain capacity.

The report noted that North America is the world’s most expensive region for construction labour at an average of $75 per hour.

According to the report, outside North America, Switzerland remains an expensive country to build in. Zurich has surpassed Geneva to claim third place in the global ranking, and the most expensive in Europe, with an average cost of US$5,035 per m2, up 8.2 percent on the year.

The report revealed that London has re-entered the top ten in tenth position, with an average cost of US$4,473 per m2. According to the report, high costs in the UK are being driven by factors including the growing capacity squeeze and skills shortage in the sector.

In terms of deglobalization trends and nearshoring worldwide, the report noted that they are seeing growth and investment in manufacturing, especially in emerging international markets such as Malaysia, Indonesia, Nigeria, Brazil and Mexico. Labour constraints remain a significant inflationary factor globally, and all but three of the 91 markets survey reported an impact from skilled labour shortages.