Message from the CEO

Directors’ Message

Long-time executive leader Joe Rekab is transitioning to a new senior advisory role in the practice, as Chairman of the Board. Toby Mallinder is taking the helm as the new Managing Director of the firm, and Gord Smith is taking on the role of Operations Director. All three have played key leadership roles in BTY’s expansion across Canada, the United States, Europe, MENA and Central Asia.

Like the markets the firm is rooted in, BTY has seen enormous change since 1978. The issues in the firm’s early years were the building blocks of cities: housing, transportation, schools, hospitals, energy, and water and wastewater facilities. Environmental concerns had not yet come so perilously close to the tipping point that we are rapidly approaching.

Acceleration in the pace of urbanization has only led to the complication and intensification of issues. Building a better world for tomorrow is now more about how we integrate the building blocks with new technologies and methods to create smart cities of the future.

How do we align transit with housing to improve affordability? How do we build resilient infrastructure to mitigate the growing impacts of climate change on physical security as well as economic performance? And how do we accommodate even denser urbanization to come in ways that ensure that our cities thrive as sustainable communities?

The traditional homebuilding model is simply not efficient enough to deliver at the scale, speed and cost required to meet the affordability challenge. Construction has lagged behind in embracing new technologies and methods to improve productivity and lower costs. Whether it’s called, modular, prefab or off-site fabrication, we see this form of construction as now having the sophistication and scale to play a major role in solving the affordability challenge.

Another shift is thinking about what we build. Healthy cities offer options for both home ownership and rentals to meet the needs of different income levels. Models such as Built-to-Rent—rental homes built at scale for the primary purpose of being rented long-term—can help solve part of the affordability challenge in concert with changes to integrate policy, planning, and funding.

BTY has long been collaborating with other industry leaders–lenders, builders, architects and planners—to develop innovative approaches to the pressing issues of the day through organizations such as Urbanarium in Vancouver. We are also contributing to projects that are pioneering smart city infrastructure in Toronto.

The challenges are complex and the learning curve is steep. We anticipate that the changes in the industry over the next 40 years will be even more transformative than those enabled by the successive waves of computer, Internet and wireless technologies over the past four decades. We are also confident that we will be here to provide people to count on and knowledge to build with for property and infrastructure clients worldwide.

Canadian Construction Outlook

OVERVIEW

Canada’s fundamentals remain positive despite continuing uncertainties over trade and tariffs and volatility in oil prices that weaken business investment, and a cooling residential sector due in part to a tighter lending environment and rising interest rates.

Strong population growth continues to support construction demand for new homes, schools, hospitals, and transportation, transit, and water and wastewater infrastructure. In 2017, 360,000 immigrants accounted for 75% of Canada’s total population increase. The United States’ current stance on immigration will work in Canada’s favour, enabling companies to attract top talent, especially in the tech sector.

The federal government’s housing strategy will create 100,000 new units and repair 300,000 existing units over the coming decade. This will help accommodate the influx in concert with multiple provincial and municipal housing initiatives to improve affordability for both home buyers and renters.

The long-awaited flow of investment funds from the Investing in Canada program and the newly established Canada Infrastructure Bank (CIB) started in August 2018 with a $1.28 billion, 15-year loan towards the $6.3 billion light-rail project in Montreal, led by Caisse de dépôt et placement du Québec. Of CIB’s initial $35 billion in public funding, $15 billion is earmarked for public transit, trade and transportation corridors, and green infrastructure projects.

The current federal government has allocated more than $80 billion in infrastructure spending over the coming decade. Relatively weak investment in the oil and gas industry over the past two years has shown signs of strengthening with the return of mega-projects such as the $40-billion LNG Canada natural gas pipeline in British Columbia. Several other major LNG plants are close to final investment decisions, on both the west and east coasts.

Overall, there are 418 projects currently under construction or planned in the resource sector, representing $585 billion in actual and potential capital investment. Energy projects account for 87% of the total value of major projects in that inventory, with minerals and metals projects at 12%, and forest projects at 1%.

ONTARIO

A strong overall economic performance drives healthy activity across all sectors. Housing starts can expect a slight dip but will remain well above historic averages.

 

BRITISH COLUMBIA

Mega projects in energy and transportation support continued strength in overall construction as the economy and residential sectors slow after years of robust expansion.

 

ALBERTA

Oil price volatility and challenges in getting oil to market will curtail growth in 2019. Construction activity will be strongest in the industrial  and infrastructure sectors.

 

SASKATCHEWAN

Investment in energy and infrastructure projects and moderate growth in residential, industrial and commercial sectors is expected for the province. Saskatoon and Regina will lead growth in 2019.

 

MANITOBA

Large new industrial projects and investment in energy projects will help balance moderation on the residential and commercial sectors. Office, hotel and retail projects will strengthen activity in Winnipeg.

 

QUEBEC

A surge of office and condo investment, strong demand for industry and warehousing, and sustained infrastructure spending will buoy construction levels as housing starts decline slightly.

 

ATLANTIC PROVINCES

Newfoundland and Labrador will lead all provinces in growth in 2019 with a big boost from increased oil production, followed by Prince Edward Island close behind.

BRITISH COLUMBIA 
38,500

ALBERTA 
29,000

SASKATCHEWAN  
3,800

MANITOBA 
6,800

ONTARIO 
73,000

QUEBEC 
43,000

NEWFOUNDLAND 
1,000

PRINCE EDWARD ISLAND  
725

NOVA SCOTIA  
3,800

NEW BRUNSWICK  
2,350

Downward pricing pressure is coming from:
  • Cooling in many residential markets
  • Forecast for slowing growth in 2019
  • Low oil prices
Upward pressure on pricing is coming from:
  • Continued high immigration
  • Increased spending on infrastructure
  • Rising interest rates
  • Weaker Canadian dollar
  • Carbon tax

Escalation Forecast

Ontario

6% to 8%

British Columbia

6% to 8%

Alberta

1% to 2%

Saskatchewan

1% to 2%

Manitoba

2% to 3%

Quebec

3% to 5%

Atlantic Provinces

0% to 1%

Escalation expected to be highest in Vancouver, Toronto and Montreal.

Canadian Regional Snapshots

Healthy economy supports construction across sectors

Increased business investment, major infrastructure projects and busy commercial and industrial sectors will help offset a slight dip in residential construction in the province. The provincial economy is projected to slip slightly due to anticipated slower growth in the U.S. and trade uncertainties, but major transportation projects, substantial investment in municipal infrastructure, and strong demand for office, warehousing and fulfillment space add up to healthy construction levels.
 

Region Experts:

Joanne Henson
Director
George Chen
Director
Phil Pavitt
Director

(Sources: Central 1, Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData))

Mega projects offset residential pullback

Several multibillion-dollar mega projects will sustain strength in overall construction as the provincial economy and residential sector take a breather after many years of robust expansion, with GDP forecast to slip slightly. Despite the residential decline, large energy and transportation projects as well as demand for space from a booming tech sector, now 7% of the provincial economy, will put even more stress on an already tight labour market.
 

Region Experts:

Ping Pang
Director
Wayne Procter
Director
Padraic Kelly
Director

(Sources: Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData))

Infrastructure and industrial lead construction

Oil price volatility and challenges in getting oil to market will see Alberta’s growth curtailed in 2019 before rebounding in 2020, when Enbridge’s Line 3 replacement is expected to be fully operational. The province remains a top destination for immigrants and is set to again become a magnet for Canadians moving from other provinces, which will keep residential building steady. Major infrastructure projects and strong industrial demand will sustain healthy construction levels.
 

Region Experts:

Michael Gabert
Regional Director, Prairies
Nathan Gerbrecht
Director
Steve Botsio
Sr. Project Consultant

(Sources: Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData))

Energy and infrastructure investment boosts construction

Saskatchewan’s economy will be on the upswing in 2019 with significant investment in energy and infrastructure helping to keep construction levels healthy. The Line 3 pipeline replacement program and the Regina bypass are two of the largest projects underway. That city is a bright spot, with multiple large commercial and institutional projects. More federal infrastructure funds are now flowing into the province, which will help offset a reduction in provincial infrastructure investment.
 

Region Experts:

Renata Mag-atas Blair
Project Manager
Ben Weishaupt
Sr. Project Consultant

(Sources: Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData))

Large non-residential projects help offset housing dip

Large new industrial and infrastructure projects will help offset a forecast decline in housing starts and the winding down of mega projects in the energy sector. The world’s largest pea processing plant, expansion of a major potato processing facility, Manitoba’s portion of the Line 3 Pipeline Replacement Project, and federally funded infrastructure projects are among the new undertakings. Winnipeg’s commercial and office construction will also thrive.
 

Region Experts:

Ciaran McFadden
Sr. Project Consultant
Barry Maguire
Sr. Project Consultant

(Sources: Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData))

Strength in every sector supports high construction levels

A robust economy over the past two years, a rising tide of office and condo investment, and sustained infrastructure spending will offset moderation in the residential sector. Montreal will be especially busy with a strong influx of foreign investment in mixed-use and office complex development, as well as major regional transportation projects including the Champlain Bridge, REM integrated rail network, and the upgrade to Pierre Elliot Trudeau International Airport.
 

Region Experts:

Louis Guilbeault
Director
Michael Zegarelli
Director

(Sources: Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData), La Commission de la Construction du Québec)

Construction levels moderate with residential pullback

Newfoundland and Labrador, buoyed by new and expanded oil production, will lead the region in growth, followed by Prince Edward Island, which has strong population growth supporting residential construction. The proposed Goldboro LNG project and stronger population growth could boost construction activity levels Nova Scotia, while increased federal funding for infrastructure investment and higher levels of in-migration in New Brunswick will help sustain healthy construction activity there.
 

Region Experts:

Sam Rekab
Project Consultant
Sean Mooney
Project Consultant

(Sources: Conference Board of Canada, Scotiabank, Royal Bank, BMO, Statistics Canada, PIP Spring 2017 (CanaData))

International Markets in Focus

International Snapshots

OVERVIEW OF U.S. CONSTRUCTION OUTLOOK

Non-residential to lead growth in U.S. construction spending
Infrastructure to rise, residential to decline

Non-residential construction spending in the U.S. is forecast to grow by 4.7% in 2018 and moderate slightly to 4.0% in 2019. Overall construction starts are expected at $808 billion for 2019, inching slightly ahead of 2018’s $807 billion. The anticipated moderation comes against a backdrop of an expected slowing of the country’s economic growth, rising interest rates and increased materials costs. The U.S. GDP growth is forecast to rise to 3.1% in 2018 and moderate to 2.5% in 2019.

The leading non-residential sectors and projected growth rates for spending in 2019 include:

  • Public Safety – 5.9%
  • Education – 5.2%
  • Industrial – 4.9%
  • Healthcare – 4.4%
  • Office – 4.0%

Public works construction will increase 4%, with growth across most of the project types. A federal appropriations bill is providing greater funding for transportation projects that will carry over into 2019. Among the transportation sub-sectors that are seeing some of the healthiest growth are airports. Multiple airport expansions and redevelopments are using the Public Private Partnership (P3) model, with spending on pre-launch and in-progress P3 projects valued at $51.7 billion.

Among those using the P3 Model under construction are the $4-billion LaGuardia Airport CTB Project and the $3.9-billion LaGuardia Terminal C & D project. The $1-billion Consolidated Rent-A-Car facility at Los Angeles International Airport achieved financial completion in 2018.

Single family is expected to see a 3% decline in housing starts to 815,000, with multi-family projected to have an 8% drop in units to 465,000. The moderations are due partly to increases in mortgage rates, reduced affordability, and tax reform that reduced tax advantages for home ownership.

Rising materials costs, such as import tariffs on steel and aluminum products, price increases in diesel fuel, lumber, gypsum products and plastic construction products could slow growth in 2019. By mid-2018, year-over-year increases in materials costs for construction had risen by 10%.

With the U.S. unemployment rate expected to remain below 4% into 2019, persistent labour shortages are expected to continue. The construction industry workforce
is estimated to be close to one-third immigrant labour, and largely Hispanic. The ongoing immigration issues at play in the U.S. could further reduce the number of workers available.

FMI Construction Outlook, American Institute of Architects (AIA) Construction Consensus Forecast, 2019 Dodge Construction Outlook, ConstructConnect

Region Experts:

Adam McKeown
Regional Director, California
Lionel Dore
Director
Erin Price
Director

In the shadow of uncertainty over Brexit, the UK construction industry is expected to dip slightly in 2018 by 0.6% before rebounding to 2.3% growth in 2019 and 1.9% in 2020.

Home building and infrastructure will lead growth as many commercial and retail developers are taking a wait-and-see attitude before committing to delivering new projects. Other impacts of Brexit uncertainty include a decline of 15% to 20% in the value of GBP against the Euro, which drives up the cost of imported material items, and a potential reduction in the labour pool.

The infrastructure sector–forecast to rise by 5% in 2018 and 2% in 2019 – remains the growth engine for the industry. Output is forecast to hit a historic high of £23.6 billion by 2020, driven by large projects such as HS2 and Hinkley Point C, two new nuclear power stations.

Housing demand remains strong. Even with 27,160 new-build homes completed in 2017, the London Plan for that year identifies current demand at close to 65,000 new homes a year in the capital, which accounts for 20% to 30% of construction in the UK.

While prime residential housing remains stagnant, the number of planned homes in London increased by 86% year-on-year in July 2018, with several large housing association and private rental sector (PRS) developments registered in that time.

Public Sector Housing is also set to rise with the removal of borrowing caps set in 2012 on Council Housing Revenue Accounts. The removal is expected to enable Councils to build another 10,000 homes a year.

The challenges of low availability of land, high land prices and high property prices in London are helping the Build-to-Rent (BtR) sector thrive there and across the country. The total number of BtR homes completed, under construction and in planning across the UK rose by 30% between Q1 2017 and Q1 2018. The number of completed BtR homes jumped by 45% in the same period, increasing from 14,371 to 20,863. Industry estimates project that the sector, which is now attracting institutional investment, could provide a further 15,000 homes each year.

BTY’s experience in BtR schemes, in combination with expertise in Employers’ Agent services in the UK, makes our offering unique. BTY’s RICS professionals provide owners, developers and architects project solutions from early concept design and business case development to finalisation of design and construction project controls.

RICS, Office for National Statistics, Inside Housing, Reuters

Region Experts:

Joe Cutler
Director
Rachael Foster-Scoles
Associate Director

GDP growth is forecast at 8.9% in 2018 and 4.5% in 2019 — roughly double the projected average growth rate for the EU — with a critical underlying assumption being that the same customs and trading conditions will continue during a Brexit transition next year.

This strong performance will support healthy growth across sectors. Total construction output is expected to top €20 billion, an increase of two-thirds over three years, but still far from the overheated late stages of the pre-2007 Irish construction market crash. By comparison, output in 2006 was estimated at €35.5 billion.

A chronic lack of housing in Irish cities, particularly acute in Dublin, is worsening affordability nationwide. Housing completions are forecast at 18,000 in 2018, which is only about half the estimated demand for new housing stock required simply to meet natural demand. The shortage is also driving up rental prices and homelessness.

Several large-scale housing initiatives, including nearly 1,000 units of social housing being procured through PPPs, are in the pipeline. South Dublin County Council is planning for 975 new homes, and Dublin City Council is preparing to spend up to €1 billion on social housing. Privately led, internationally financed apartment and Build-to-Rent sector developments are also expanding.

The government’s Project Ireland 2040 program has set long-term targets to boost housing stock to meet estimated population growth of one million by 2040. Plans call for adding between 25,000 and 35,000 homes each year, roughly double the current number. By 2027, there will be 112,000 new social homes. State-owned land will be used to support the program. BTY is providing Lenders’ Technical and Lifecycle advisory services on Government’s Social Housing PPP Bundle Two – which will provide 465 social housing units to the market in 2020.

The need for infrastructure development in transportation, water, wastewater, and telecommunications is also driving increased investment through the Ireland 2040 and the National Development plans. Among the major transportation projects are:

  • A second runway and new control tower for Dublin Airport as well as upgrades and expansions in regional airports.
  • A new Atlantic Road Corridor connecting Cork, Limerick, Galway and Sligo, including the M20 Cork-Limerick motorway, and €7.3 billion for regional roads.
  • The Metro Link to connect Swords and Dublin Airport to the city centre by rail has been extended south to upgrade the Luas Green Line.

While wider inflation is expected to remain relatively low at 1.0% in 2018 and 1.3% in 2019, the already high rate of construction price inflation could hobble the government’s ability to follow through on housing and infrastructure plans. Another threat is the acute shortage of labour and skills that extends in trades and construction related professional services as Ireland edges closer to full employment. The availability of labour from the EU’s large labour pool could help take the pressure off as it did in the pre-2008 building boom.

Government of Ireland, Economic and Social Research Institute, Irish Times, PWC Global Economic Outlook, Bank of Ireland

Region Experts:

Jack McInerney
Director

Investment increasing in projects across Central Asia

The steady expansion of China’s Belt and Road Initiative (BRI) across Central Asia has seen a marked increase in investment by international financing institutions in both transportation and energy projects in resource-rich CIS countries such as Kazakhstan across Central Asia.

The $1-trillion BRI aims to build trade and infrastructure networks connecting economies along the ancient Silk Route, allowing goods to be delivered from China’s Pacific coast to Europe. The trade corridor’s overland route through Kazakhstan – an alternate to shipping goods by sea — allows delivery time to be reduced from 40 to 60 days to 13 to 14 days.

One of the largest projects in Kazakhstan’s own ambitious highway, railway and airport expansion and upgrade programs is the Big Almaty Ring Road project, a six-lane ring road that includes 21 bridges and 19 viaducts. It’s the first PPP project in the county, and BTY is providing Environmental and Safety Advisory services on the project.

Improved transportation infrastructure would support the accelerated development of the country’s energy and resource sectors. Kazakhstan, the world’s 9th largest country, is estimated to have the 11th largest proven reserves of both petroleum and natural gas, the second largest uranium, chromium, lead, and zinc reserves, the third largest manganese reserves, and the fifth largest copper reserves. It also ranks in the top ten for coal, iron, and gold.

Israel is undertaking its largest ever PPP project, a $9-billion expansion of Jerusalem’s light rail system. The expansion includes the construction of the Green Line, for which BTY is providing Pre-Bid Technical Due Diligence Services. The line will include 22.6km of track, 33 stations, 60 to 70 LRT vehicles and additional depot and Operations Control Centre facilities.

Turkey, which also has a strategic position along the BRI, remains a strong performer in PPP infrastructure development with multiple healthcare and road projects completed. A robust energy pipeline has multiple offshore wind, solar, and geothermal projects, while proposed transportation projects include 8,000 km of motorways and rail upgrades.

Over the past five years, BTY has served as Lenders’ Technical, Environmental and Social Advisors – and continues to serve as Construction and Operations Term Monitor – on five of the country’s most notable Healthcare PPP projects. We have also added transportation PPP projects in the region with our involvement in refinancing services for the 3rd Bosporus Bridge, and expanded an offering to include social, labour, environmental impact and safety advisory services.

As Turkey faces challenging economic headwinds with financing, it is expected that only the highest priority projects will move forward in 2019. Economic growth is forecast to slow to 4.5% in 2018 and to 4.0% in 2019. At the same time, there is forward movement expected in refinancing and secondary market deals as the PPP healthcare and transportation sectors mature and new financing venues such as the Project Bonds market are launched.

World Bank, Trend News Agency, The Independent, Worldban, Globes

Region Experts:

Tunca Ataoglu
Regional Director, MENA

Major Trends Shaping Construction

A shortfall of affordable rental housing is a pressing global issue that is playing out locally in major urban centres.

Housing stock has not expanded fast enough to keep up with increasing demand and the costs of home ownership have often risen far more quickly than incomes. As more middle-income earners are priced out of the home buying market, rents have soared and vacancy rates have plummeted.

The concerns have reached crisis levels in some of the world ’s most prosperous cities, where the forces of growing urbanization, slowly modernizing regulatory apparatus and increasing pace of technological innovation in construction are compounding the pressure to deploy scalable solutions locally.

Typically, a home is deemed affordable when buyers spend 2.5 to 3 times gross annual household income on a house. Another rule of thumb for affordability – including renting – is spending no more than 30% of annual household income on housing.

An estimated 22% of renters in Vancouver spend 50% or more of their salaries on housing. In the Greater Toronto Area (GTA), it’s 23%,1 with 47% of Toronto renters spending more than 30% of their income on housing.2 The Royal Institution of Chartered Surveyors (RICS) predicts that London (UK) rents are likely to rise by 3% a year for the next five years, outstripping increases in house prices.3 In Dublin, renters are now spending as much as 55% of their take-home pay on rent.4

Typically, successful affordable rental projects require a combination of measures and a high level of public and private sector collaboration to overcome the fragmentation and achieve project objectives. The following measures have proven to be among the most effective:

  • Giving or leasing surplus municipal/provincial/federal land
  • Transit Corridor Zoning
  • Zoning for rental only
  • Low-cost loans and funding opportunities
  • Exemption/Waiver of Development Cost Contributions
  • Expedited processing
  • Density Bonusing
  • Alternate Development Standards
  • Reduced unit size and/or parking requirement reduction
  • Property tax abatement and subsidies
  • Inclusionary Zoning (IZ)

The UK is meeting the leap in demand for affordable rental at scale with a new development type, Build-to-Rent (BtR). In BtR schemes, national and local governments work together with developers to accelerate development on large, phased sites. BtR rental homes – managed professionally and with amenities – are maintained as rentals for the long-term, and generate low-to moderate returns, but steady long-term income. More than 47,000 BtR homes have been built or are under construction. As BtR construction and project finance experts, BTY is leveraging our experience in this scheme with insights from leading developers, funders and contractors to help the industry understand and implement BtR.

For the first time in decades, demand for rental housing in Canada is outpacing growth in ownership, which fell from 68% to 67%, the first drop since 1971.5 An estimated 32% of new households in Canada are rental households, and some 43% of Canadian renters now face affordability issues.

The need to develop new affordable rental housing on a massive scale is clear. The path to delivering is not. One of the single most important factors in the economics of developing housing, whether for ownership or rent, is the cost of land. It has been estimated that 80% of the increase in home prices across 14 advanced countries since the Second World War has been due to the increasing prices of land, with construction costs holding flat.6

Another key element in building affordable rental housing is reducing construction costs by improving efficiencies and productivity with innovative methods and technologies.

  • Value engineering, improved procurement, scheduling and processes can reduce construction costs by up to 30%, according to McKinsey.7
  • Modular construction for accelerated, large-scale development using factory manufactured products has made tremendous gains in quality and efficiency that can reduce delivery time from 40% to 50%.8
  • Implementing technologies including BIM, LEAN Planning, 3D Printing, SMART Technology, and AI.

1  CTV News, Vancouver, “1-in-5 B.C. renters spending more than half of income on housing”, May 8, 2018
2  CBC News, “New rental report shows “Toronto is in the midst of a housing crisis,” says councillor”, February 9, 2018
3  On The Market, “Rental market: What will happen in 2018?”, August 31, 2018
4  The Irish Times, “Is the housing market getting more unfair?”, Novermber 7, 2017
5  The Globe and Mail, “Canada’s rental growth outstrips home ownership”, May 8, 2018
6  C.D. Howe Institute, Commentary No. 513, “Through the Roof: The High Cost of Barriers to Building New Housing in Canadian Municipalities”, May, 2018
7  McKinsey Global Institute, “A blueprint for addressing the global affordable housing challenge”, October, 2014
8  Ibid.

Topic Experts:

Connor Falls
Director
Saira Muzaffar
Director

3 D's – Data, Digital and (User) Design Guide Development

Smart Cities integrate multiple information and communication technologies to monitor and manage urban assets and services from roads, transit, and water and wastewater management to “smart” parking meters, streetlights, and even trash receptacles. The goal is to build in the capability to respond intelligently to changes in the urban environment, including user demands and other infrastructure, to improve performance on a number of fronts:

  • Moving people and goods more efficiently
  • Reducing energy use and greenhouse gas emissions
  • Monitoring air quality and noise pollution
  • Supporting the development of affordable housing

The global market for building the infrastructure for smart cities is predicted to have a value of up to $1.6 trillion by 2020.1 To date much of the focus has been on developing and deploying hardware-sensor based physical infrastructure – but the fuel that makes a smart city run is data. And data flow depends on a robust digital integration broadband and telecommunications, sensors, social media, data collection and integration, automation, analytics and visualization to provide real-time situational analysis.

A number of projects underway across Canada show what a Smart City would look like on the ground.

  • Toronto is launching two smart traffic signal pilot projects that feature smart systems with new signals that can adjust traffic signals independently to respond to real-time traffic patterns at any time of the day – and communicate and synchronize with other smart signals in the vicinity to alleviate congestion.2
  • Vancouver and Surrey are proposing Canada’s first two collision-free multi-modal transportation corridors that promise to reduce transportation safety risk, greenhouse gas emissions and improve traffic efficiency. The projects feature autonomous shuttles, smart mobility infrastructure and advanced data and analytics.3
  • Sidewalk Labs has proposed a Toronto development, with 20% of land dedicated to affordable housing, that includes autonomous vehicles, a thermal grid that does not use fossil fuels, low-cost modular buildings with flexible uses and robotic delivery, and waste-management systems.4
  • Eve Park, a proposed component of West 5, a sustainable community in London (ON) that integrates four housing types (condos, townhouse, rental apartments, and retirement living), as well as office and retail, with solar panels, a solar powered parkade with electric charging stations, and high-performance road surfaces that melt snow and ice faster and reduce the use and impact of salt.5

While the smart technologies promise greater efficiency, there remain questions about use, ownership, control, protection of, and access to the data, much of it gathered in public spaces, involved in enabling a smart city. Another challenge is power. The installation and operation of millions of sensors that can retrieve and relay useful, potentially life-saving data would require enormous energy that is beyond current capacity to deliver. The rise of electric vehicles is another important element. Handling the extra demand generated by tens of thousands of EVs and plug-in hybrids will be one of the key challenges for energy management in a smart city.6

1  Bank of America Merrill Lynch -“21st Century Cities: Global Smart Cities Primer Picks”, May 2017
2  Canadian Consulting Engineer, “Toronto pilots new real-time smart traffic signal technology”, November 24, 2017
3  Government of Canada, “Smart Cities Challenge: Spotlight on Finalists”, June, 2018
4  CityMetric, “What Toronto’s Quayside project has taught us about smart cities and data”, July 13, 2018
5  West 5 Development, London, Ontario, Sifton Properties
6  Power Technology, “Smart cities: redefining urban energy”, February 8, 2018

Topic Experts:

Marie Foley
Director
Rob Wilson
Director

Building cities that can survive, adapt and grow through climate change impacts

Natural disasters have caused losses of life estimated at more than 2.5 million people and economic losses of nearly $4 trillion over the past three decades. An estimated 75% of these losses are attributable to extreme weather events, including hurricanes, typhoons, floods, and wildfires.1

Those global losses have risen from $50 billion a year in the 1980s to $200 billion in the last decade. 2017 was the worst year on record, with 710 noteworthy natural catastrophes – significantly more than the average of 605 – that caused a record $330 billion in global losses.2 The impact tracks the progression of global warming, with 17 of the 18 warmest years on record occurring since the year 2001.3

As population growth and urbanization increasingly concentrate risk in cities, and the incidence and severity of extreme weather events linked to climate change grows, developing resilient infrastructure becomes critically important to saving lives and protecting property and economic capacity. It is estimated that the next 20 years will see more infrastructure developed than what has been built over the last 2,000 years.4 The threat posed by extreme weather events can be an unprecedented opportunity to build resilient infrastructure that enables cities to prepare for, and adapt to changing conditions – and withstand and recover rapidly from disruptions.

While it is challenging to predict when and where natural disasters will occur, predictive software can now provide more accurate information on the probability of natural events occurring with given return periods. Managing risk from climate change can cover a broad range. The following examples of planning for resilience focus on water and sanitation, and transportation – areas significantly affected by flooding – and fire prevention and suppression.

A major issue in storms and flooding is the transfer of pathogens and bacteria into water systems. Updating and upgrading infrastructure to facilitate safe removal of stormwater is critical – as are measures to increase water storage capacity and repair ageing drinking water systems.

Redundancy, a key element in resilience, in the sanitation sector is strongly related to the adoption of modular, decentralized wastewater treatment technologies. New wastewater technologies include drop-in small footprint and energy-efficient secondary treatment replacement reactors for conventional wastewater plants.

While existing installations serve 50,000 to 1 million people, multiple small reactors could be placed within the footprint of existing plants or deployed as part of a distributed system with network redundancy to re-route waste flows from city quadrants that have been disrupted by an extreme weather event, such as sudden heavy rains.5

Urbanization and suburbanization disrupt natural watershed function, preventing efficient rainfall retention that result in much higher run-off volumes. Low-impact development (LID) can mitigate storm water runoff, and reduce flood risk and pollution loads.

Ontario’s Credit Valley Conservation Authority has tracked the results of LID practices for water quantity and quality results for six years, achieving up to an 80% reduction in runoff volumes, an 80% decrease in suspended solids and phosphorus loadings, and heavy metal loading reductions from 50% to 90% as well as a cooling effect on water filtered by LID systems of more than 5°C.6

While the costs of preventing wildfires are difficult to measure, they are estimated to be between 11% to 51% of actual fire costs. They include the cost of labour to suppress the fires as well as value of homes, buildings, evacuation, losses of jobs and tourism, land devaluation and cost of relief provided.

There are a number of measures than can make fire prevention and suppression more efficient and less costly. These include controlled burns that lessen the impact when fires occur, and vegetation strips of fire-resistant plants that reduce a fire’s ability to spread. Measures to improve fire suppression include stockpiling equipment in high-risk areas, reservoir maintenance, and building and maintaining roads that enable fire engine access.

Building codes that are adaptive to fire risks include preventative measures such as a moisture barrier that serves as a fire suppressant. Homes with their own pumping system and metal roofs significantly increases the probability that they would survive a fire.

Roads, bridges, railways and runways are heavily exposed to climate impacts including rising temperatures, more frequent and intense rainfall, and flooding. Urban densification reduces the amount of transportation infrastructure exposed to climate impacts and allows re-deployment of resources to strengthen existing infrastructure.

Complete communities where residents can easily access goods and services by foot or bicycle improve urban climate resilience.7 Iowa’s Department of Transportation (DOT), Iowa State University and the University of Iowa Flood Center used historical rainfall data to forecast peak discharge flows from two local basins that had recently experienced severe flooding events that have affected primary highways and the interstate.

Using climate forecasting and streamflow modelling, researchers estimated future flooding in the region and compared it to the transportation assets inventory. An analysis enabled the DOT to identify at-risk roads, bridges and other infrastructure and to include design elements that help to reduce their vulnerability to future flooding.8

1  The World Bank, Understanding Poverty, “Disaster Risk Management”, September 25, 2018
2  Munich RE, “Natural catastrophe review: Series of hurricanes makes 2017 year of highest insured losses ever”, January 4, 2018
3  Prairie Climate Centre, “2017 ranked second-hottest year on record”, January 22, 2018
4  The World Bank, Sustainable Cities, “Engineering our way out of disasters – the promise of resilient infrastructure”, 10/12/2017
5  Prairie Climate Centre, “Eight Ways Cities are Building Climate Resilience”, April 10, 2017
6  Ibid.
7  Prairie Climate Centre, “Building a Climate-Resilient City: Transportation infrastructure”, 2017
8  Ibid.

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Göze Dogu
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Sibel Gülen
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