I don’t have extra sensory perception (ESP) and I cannot tell you when the Leafs will win the cup. I’m not even able to predict what the weather will be tomorrow (neither can a meteorologist so I’m in good company). However, I can tell you, that we are soon to see a change in building restoration that we in the GTA have never experienced before.

In my opinion, this is where we are heading: In 5 to 10 years, Restoration Contractors will work for 4 or 5 Property Management Companies/Consultants and those Property Management Companies/Consultants will contract all their work to one Restoration Contractor.

I realize that in a world where transparency and competitive bidding is the norm, many may believe this scenario will never happen. Yet, if this relationship does not exist, I believe the following example will occur with many buildings:

Today, you live in a condominium that’s nine years old and assume you are also one of the lucky ones that have a building that was well built. So, you believe that in 5 to 10 years your building’s façade will need some “tender loving care” and your Condo Corporation will be financially equipped to deal with those costs.

Now, jump forward those 5 to 10 years (2025), your building is leaking and the decision has been made to restore the façade next spring, and you have the funds to carry out the repairs. Great!

That February, you have a consultant tender with your building and six competent contractors are selected. They bid and you have a meeting to choose the one you want. But there is a problem; three contractors did not submit and the remaining three have a start date that is a year away!

But your building leaks now and it has to be done now. The residents are complaining and damage to the inside is getting worse. Why do contractors require a year to start the project, you ask.

The answer is simple, in 5 to 10 years from now, you will need a competent, knowledgeable and fiscally sound contractor with the skilled labour to provide the expertise to complete the project.

But so does every other building in the GTA.

 

Since 1928 when my grandfather, Peter Byberg, started Dominion Caulking Limited, construction companies have always had an abundance of labour. During the Great Depression of 1929 and 30’s, any work to allow for a family to survive was good work. It was also helpful that the buildings were not very tall (compared to today’s standard) and the vast amount of construction was on houses. The owners of small construction companies often worked in the field with their employees.

By the 1950’s, the labour force that came back from the war and additional immigration from Europe added to that labour force. Yet, buildings were increasing in scale. In recent times, people from all over the world are settling in the GTA.

Unlike almost any other industry, the Restoration of Buildings has one factor that sets it apart. Until they are demolished, buildings have to be repaired.

The chart below will help you understand why, in the future, you will have to wait a year to start your project. I have made a few assumptions:

byberg-chart-editorial

  1. The number of “Larger” buildings built in the time frame shown. Yet if you include Commercial, Industrial, Institutional and Residential and in all of the GTA, I might be light with the totals.
  2. After 20 years+/- all buildings need to be repaired, some earlier, some later.
  3. A project, big or small is one project; I did not differentiate between Façade and Garage Restoration Projects or different projects on one site.

If a building is built in 1950, by the time 2015 comes around, that building will have been restored four times. Therefore, if 100 buildings were built in 1950, there would be at least 400 restoration projects by now on those buildings alone. The same can be said for all buildings built in the 1960’s. But with the size, complexity, safety factors and financial concerns related to the buildings built since the 70’s, there is a potential storm brewing. Not even accounting for the complexity, height or a restoration company’s financial abilities, we can see that the sheer number of projects is going to be overwhelming. With the increase in number of projects and their complexity, the restoration contractor of the future will have to be more astute when it comes to the fundamentals of business, not just the restoration of a building.

Far too many restoration companies are still in the mode of “getting a project means being cheap and are blind to the risks” and far too many owners and Property Managers want them to be that way. Yet the reality is that restoration companies will have to find and invest in the education of their office staff, so they can understand and weigh the financial and safety risks of each project in order to submit a competent proposal. This will be an increase to the costs of overhead. We’ve seen labour increases before but cost increases in the future will be knowledge-based, not brawn.

The companies that are currently investing in education may not see a payoff now, but in 5 to 10 years, they will be far ahead of the competition, and their competitors may never catch up. In addition, the ability to finance a large number of projects is getting increasingly difficult. Financial institutions have always required personal backing from the owners and a great track record for the company yet the personnel that can understand the financial aspect of business in general, and not just how to restore a building, is becoming more crucial. Restoration companies need to know how to generate profit for sustainability for years to come and not just one project or one year. Reinvestment in safety, equipment and education of the management personnel will become a necessity for a company to be fiscally responsible.

Just because you have faith in a consultant to understand how a building is to be restored, you and the consultant must be able to rely on the contractor to understand it as well. Although the employees on site have to ultimately perform the task, it is the brain thrust of the company that has to understand how to weigh the safety, effort, and financial risks of a project prior to a bid even being submitted. In today’s building restoration market, there are far too many companies not weighing the risk.

The increase in size, volume and complexity of buildings needing to be restored, the knowledge of business, the increase in non-site related personnel, the restraints to financing, and at the same time, the reduction in the number of restoration companies that will be able to implement and deal with these issues all provide the foundation for my prediction for the future landscape of the Restoration Market.