Tariff increases and uncertainty over skilled-trades collective bargaining agreement negotiations are inflating the cost of office construction projects across the country, says Avison Young’s head of Canadian project management.

“Tariffs are exerting significant inflationary pressures on the construction industry, particularly affecting metals like steel and aluminum,” Arlene Dedier said in an interview published on the firm’s website.

She explained that the ripple — or “butterfly” — effect of U.S.-based components influences Canadian product pricing and leads to logistical delays as goods are held up at ports.

She noted that some manufacturers are stockpiling materials, but once those reserves are depleted, bottlenecks may worsen. Avison Young is in ongoing conversations with industry suppliers to assess sourcing options beyond the U.S., including the European Union, U.K., and Canadian manufacturers. However, she cautioned that Canadian suppliers are smaller and would need to scale up quickly to meet demand.

Adding to the complexity is the question of how to apply tariffs to materials already in transit.

“This is already having an impact as materials can’t get released because people logistically don’t know how to apply the tariffs,” said Dedier.

These challenges are reminiscent of the domino effect seen during the pandemic, whereby shipping containers stalled at one port caused disruptions further down the supply chain.

“To mitigate these risks, we’re implementing management reserves, which are undisclosed funds held between project managers and clients to account for unforeseen tariff impacts of longer carrying costs,” she added.

This strategy helps de-risk projects and allows for more precise risk planning and mitigation, according to Dedier.

Meanwhile, the office construction sector is facing labour challenges that could affect major markets, particularly in Ontario and Quebec.

“What we’ve heard from general contractors is that people want to work,” she said, adding that Avison Young is “cautiously optimistic” about the outcome of subtrades negotiations.

Both Ontario and Quebec’s subtrades collective bargaining agreements are due to expire at the end of this month. Alberta renegotiations loom in June with Manitoba and B.C. deals set to end in October and December, respectively.

Despite the uncertainty, many in the industry are motivated to push through, wary of a potential economic downturn, said Dedier.

However, she warned of a longer-term issue looming in the skilled-trades sector. The aging workforce and lack of younger workers entering the field could pose significant challenges in the coming years.

“We don’t have enough people joining the construction trades as we address not just the commercial industry, but the housing industry and infrastructure,” said Dedier. “That is something we are paying attention to as we’re going to see it come to a head in the next five years.”

Pictured: Ofiswerks project in Vancouver while it was being constructed.

Photo: Ofiswerks/Ulma Construction

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