By: The Working Forest Staff
THE INVESTOR, JLL — Timber buildings are grabbing headlines around the world, as developers race to meet tenant demands for sustainable, wellness-oriented office spaces. But it’s Canada that is leading the charge, providing incentives for investors looking to wood.
There are over 500 mass timber mid-rise buildings across Canada either completed or at various stages of development, according to Natural Resources Canada including the 18-story Brock Commons, the world’s tallest building made primarily of mass timber. A newer project, 77 Wade, will be Canada’s tallest commercial mass timber development at 8 stories.
Wood construction has grown increasingly competitive on a cost basis in recent years, offering potential savings in a number of areas. Mass timber buildings go up much more quickly than conventional concrete construction, translating into fewer days on-site. The inherent beauty of wood also allows for savings on interior finishing costs. And one recent case study of a wood building in Seattle by the design firm DLR found a 15 percent reduction in operational costs.
“Mass timber isn’t just a fad,” says Les Medd, senior vice president of Project & Development Services at JLL. “It’s going to continue to grow in the marketplace, and in Canada especially.”
Ongoing trade conflicts with the U.S. resulted in tariffs of 25 percent on steel imports to Canada last year, raising costs of conventional construction; while the tariffs were lifted in May of 2019, a successor to NAFTA has yet to be negotiated, resulting in ongoing price uncertainty. A boom in housing construction in Toronto has further driven up the cost of concrete and steel projects.
“Overall ROI on mass timber developments are dependent on local market factors, including access to materials as well as comparative costs for conventional concrete and steel construction. In Canada, these factors are increasingly tilting towards wood,” says Medd.
Canada’s forestry industry is one of the largest in the world, and government support for wood construction materials suppliers has helped encourage investments in this market that have reduced materials costs.
Federal and provincial governments have been playing a critical role in helping the mass timber construction industry take root in Canada with a series of policy initiatives reducing costs as well as regulatory barriers for mass timber development.
Canada’s environmental agency, Natural Resources Canada (NRCan), has been funding the development of the mass timber industry through various programs since 2007. These efforts began with programs to support research and development of new materials, and in 2013 the agency also began funding commercial-scale projects through the Tall Wood Building Demonstration Initiative – which helped support construction of the 18-story Brock Commons.
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