- What Altus Group expects construction costs to stabilize after years of acceleration
- Why Reduced construction volume is putting downward pressure on construction costs
- What next Prices could be impacted by tariff tensions and other factors
After a period of supply chain instability brought on by the pandemic, construction costs for Canadian commercial properties are finally stabilizing, Altus Group said in a new report.
Altus published its 2025 Canadian Cost Guide on Thursday, an annual reference tool for construction budgeting based on responses from the firm’s client base, which includes developers and building contractors. With construction volumes projected to decline by as much as 8% in 2025, the firm is expecting construction costs to remain the same or decline.
“We’re definitely looking at a much softer environment on construction costs,” Peter Norman, Altus vice president and head of economic strategy, told Green Street News.
Although most markets tracked by the firm have seen a slight increase in construction costs, prices in the Greater Toronto Area and Ottawa have dropped, continuing a downward trend that followed a drop in construction activity. Overall, construction volumes across the country are down 5% over the last two years, Norman said.
Modest cost increases
In Vancouver, construction costs for condos and apartments have risen slightly to an estimated high of $405/sq ft for projects up to 12 storeys, compared to 2024’s estimated high of $400/sq ft.
Montréal, in turn, has seen construction costs for industrial building development increase from a range of $155 to $330/sq ft in 2024 to $160 to $440/sq ft in 2025. Other building types in the city saw marginal changes in pricing due to lower demand, Altus said.
In Alberta, both Calgary and Edmonton have seen higher year-over-year costs for materials and labour, thanks to a hot construction market for residential properties and infrastructure projects.
Meanwhile in Atlantic Canada, Halifax and St. John are experiencing higher costs due to labour shortages and cost increases for materials like steel.
Tariff concerns loom
Although recorded cost increases have not added significant pressure to construction budgets in 2025, factors like inflation stickiness, planned governmental building code changes and wage hikes arising from newly negotiated labour agreements are creating uncertainty for construction pricing.
“I think the big challenge is what’s going to happen to supply chains and how we’re going to deal with that,” Colin Doran, Altus’ head of development advisory for the Americas, told Green Street News.
Norman is projecting little change or even a decline in construction costs for the rest of 2025, but tariffs could change that forecast.
U.S. building materials make up around 8% of project costs, on average, Norman estimates. And although he doesn’t think the impact of a 25% tariff on imported U.S. building materials will be severe, there could be a much bigger cost effect when it comes to imports made from Canadian resources, like steel and aluminum.
“At that point, you’re getting flow-through as well as direct, retaliatory tariffs,” Norman said. “So, there is an opportunity for costs to be exposed to the additional taxes on these goods.”
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