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December 3, 2019

(Photo credit: Cicada Design Inc.)

Timber buildings are grabbing headlines around the world, as developers race to meet tenant demands for sustainable, wellness-oriented office spaces. But it’s Canada that is leading the charge, providing incentives for investors looking to wood.

There are over 500 mass timber mid-rise buildings across Canada either completed or at various stages of development, according to Natural Resources Canada including the 18-story Brock Commons, the world’s tallest building made primarily of mass timber. A newer project, 77 Wade, will be Canada’s tallest commercial mass timber development at 8 stories.

Wood construction has grown increasingly competitive on a cost basis in recent years, offering potential savings in a number of areas. Mass timber buildings go up much more quickly than conventional concrete construction, translating into fewer days on site. The inherent beauty of wood also allows for savings on interior finishing costs. And one recent case study of a wood building in Seattle by the design firm DLR found a 15 percent reduction in operational costs.

“Mass timber isn’t just a fad,” says Les Medd, Senior Vice President of Project & Development Services at JLL. “It’s going to continue to grow in the marketplace, and in Canada especially.”

Ongoing trade conflicts with the U.S. resulted in tariffs of 25 percent on steel imports to Canada last year, raising costs of conventional construction; while the tariffs were lifted in May of 2019, a successor to NAFTA has yet to be negotiated, resulting in ongoing price uncertainty. A boom in housing construction in Toronto has further driven up the cost of concrete and steel projects.

“Overall ROI on mass timber developments are dependent on local market factors, including access to materials as well as comparative costs for conventional concrete and steel construction. In Canada, these factors are increasingly tilting towards wood,” says Medd.

Canada’s forestry industry is one of the largest in the world, and government support for wood construction materials suppliers has helped encourage investments in this market that have reduced materials costs.

Government support
Federal and provincial governments have been playing a critical role in helping the mass timber construction industry take root in Canada with a series of policy initiatives reducing costs as well as regulatory barriers for mass timber development.

Canada’s environmental agency, Natural Resources Canada (NRCan), has been funding the development of the mass timber industry through various programs since 2007. These efforts began with programs to support research and development of new materials, and in 2013 the agency also began funding commercial-scale projects through the Tall Wood Building Demonstration Initiative – which helped support construction of the 18-story Brock Commons.

Building on this success, in 2017 the government launched the more ambitious Green Construction through Wood program, known as GCWood. The program has held a series of solicitations for nearly $40 million in funding to cover the incremental costs of many more demonstration projects, including 77 Wade, with separate funding rounds for tall wood buildings (i.e. taller than 10 stories), low-rise non-residential buildings, and timber bridges.

Federal and state governments have also worked to reduce regulatory barriers to mass timber. Included in NRCan’s research program was funding for work by scientific experts and regulatory agencies to develop regulations allowing wood frame construction up to 6 stories in the 2015 National Building Code of Canada (NBC). British Columbia, Quebec, Ontario, Alberta, and Nova Scotia all subsequently adopted these regulations in their provincial building codes.

These code changes rival NRCan’s grants as factors in catalyzing Canada’s wood construction boom.

“Evolution and maturation of the NBC with respect to mass timber continues to be hugely important to the growth of mid-rise mass timber construction in Canada,” says Medd. “It reduces the risk of local building departmentsrequiring significant design changes to projects, which is a risk many owners aren’t willing to take.”

Nonetheless, trailblazing wood projects even taller than the 6 stories currently covered in the code have moved forward through close collaboration with local governments.

For example, the 77 Wade team met extensively with Toronto officials about the 8-story project early in the process, providing enough time and space for all collaborators to approve the technical design for the building’s superstructure with confidence — “a key step to give the client full assurance before moving forward with more detailed design work,” says Jonathan King of BKNC, the architect of the project.

And the canopy on wood construction is expected to continue growing skyward. British Columbia has doubled the height of wood construction in its code to 12 stories, and NRCan is working with government and industry stakeholders to match this in the 2020 NBC. In addition to increasing height limits, 2020 code changes to reduce the need for additional fire resistance testing and demonstration could help reduce mass timber construction costs further.

Sustainability key
While the use of timber has been shown to reduce development costs in certain areas, developer interest has grown primarily because of tenant interest in the material’s sustainability and wellness benefits, says JLL’s Medd, and the higher rents they are willing to pay to work in mass timber spaces.

In contrast to carbon-intensive concrete and steel, whose production accounts for nearly 10 percent of global greenhouse emissions, wood construction can reduce the total carbon footprint of construction by a third. And the warm, inviting aesthetics of wood materials align with WELL building standards that help firms boost employee productivity and attract talent.

“More and more progressive tenants are willing to pay a premium for spaces that enhance employee well-being and contribute to corporate environmental performance goals,” says JLL’s Medd. “Mass timber checks both of those boxes.”

Click to find out which U.S. cities are leading sustainability measures.

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Les Medd

Senior Vice President of Project & Development Services at JLL.

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