Canada’s defence procurement, by the government's own admission, has long been “too complicated, too slow, and too reliant on international suppliers,” limiting the growth of our defence industries and associated commerce.  

That sluggishness, and lack of funding, has left Canadian workers and businesses with fewer opportunities and has hindered our industries' ability to scale and participate.

But there is reason for optimism and Canada's commercial real estate industry is watching closely, ready to play a major role in bringing Canada's new defence investment strategy to fruition.  

The Defence Industrial Strategy by the federal government aims to invest $180 billion in defence procurement and attract $290 billion in defence-related capital investment over the next 10 years, with an anticipated $125 billion downstream economic benefit by 2035.  

Available are shipbuilding contracts in Halifax; aircraft part manufacturing in Dorval and Montreal; weapons manufacturing in Ottawa; and aircraft manufacturing for Lockheed Martin, with possible work performed in Calgary, Victoria, Halifax, Montreal and Ottawa. That’s just a snapshot of the 73 various announced or in-process contracts, each valued at a minimum of $10 million, identified by Colliers’ research team. 

Meanwhile, the federal government's Building Canada Strong initiative includes a list of major infrastructure projects and strategies it estimates will lead to 337,000 jobs, $192 billion in new government investment and $500 billion in future private sector investment. 

Surge in contracts, projects requires commercial real estate support

Many of the contracts in the defence procurement strategy have specific commercial real estate requirements, such as expanded manufacturing and warehouse facilities; research and development space; training facilities; testing labs; engineering hubs; and office space. 

Major players in the commercial real estate industry will also have various complementary roles to play as these contracts switch from possible to active. Those services include research, project management, property management, valuation, workplace advisory, and sales and leasing.  

If the government is going to approve, finance and fulfill some, or all, of these major defence contracts and infrastructure projects, there could eventually be growth and hiring in financing, legal, accounting and human resources around the country. 

Massive borrowing could prompt lending rate reductions

If we look at the big-picture spending and investment numbers the government is describing, it amounts to roughly $1.16 trillion in defence and infrastructure government spending and private sector investment. 

That’s a huge amount that governments and companies will need to borrow. That scale of financing likely isn’t possible at current interest rates, so there could be easing of rates to facilitate this surge in investment. 

That easing would benefit investors and developers in all corners of the country as they try to get their own residential and commercial projects financed and built.  

Let’s keep an eye on labour and housing needs

It's important to keep an eye on two key parts of the Canadian economy: labour and housing.  

We’ve seen the cycles: the oil and gas industry booms in Northern Alberta, and blue-collar workers from the other provinces all head to Alberta. We can’t forsake having skilled labour in one region or industry for another. The skilled labour pool must expand.  

Canada’s population has been declining lately. However, in about 18 months, we'll be looking at this differently, and there will be a return to a new normal of population growth. Our governments, post-secondary institutions and young people must prioritize training for the jobs that projects like these will generate, while having enough labour to service every city, region and province.   

We can expect some increased housing demand associated with these investments as more workers come to Canada to complete these projects. It’s essential for our home-builders and development industry to be ready for a housing demand surge that might come quicker than expected. 

Canada has been experiencing challenges in trade, sovereignty and national unity in recent years. This experience has created new urgency. We’re facing a unique window in which governments seem willing to cut red tape and objections, and expedite investment. For stakeholders in commercial real estate, there’s plenty to be optimistic about, and key roles to fill.