Workers look on during an announcement for the new federal agency Build Canada Homes, in Ottawa, on Sept. 14.Justin Tang/The Canadian Press
Three weeks ago, Prime Minister Mark Carney launched the $13-billion Build Canada Homes program and promised it will showcase “modern methods of construction,” including prefab and mass-timber, to cut costs and completion times. He made the announcement in front of a modular home developed by Caivan Communities, an Ottawa home builder.
Since then, firms in this now heavily hyped corner of the development industry have been scrambling for scarce details on how the program will work and where they will fit in.
Over the past two or three years, a growing number of policy-makers have been talking up the potential of factory-built housing. They claim that the use of partially preassembled homes, built in a safe and climate-controlled environment using automated equipment and then shipped to development sites, will lower costs, waste, carbon and delays while boosting the construction sector’s notoriously poor productivity record. Most of the transitional housing built during the pandemic through Ottawa’s Rapid Housing Initiative was modular, although some of these projects failed to deliver the promised financial savings.
Canadian builders prep for a prefab future as Ottawa pushes for affordability
Mr. Carney said the new plan is to begin by erecting 4,000 “factory-built” homes on 88 federal sites in Dartmouth, N.S., Longueuil, Que., Ottawa, Toronto, Winnipeg and Edmonton, with the potential for 45,000 more homes. The developer will be Build Canada Homes (BCH), a new agency established to oversee the federal sites that encompass 463 hectares that have been deemed suitable for housing. The bulk of them will be for low- and middle-income households.
Less certain is whether BCH intends to order prefabricated components – everything from fully fitted out wall panels to completed rooms that can be shipped to construction sites and assembled there – directly from Canada’s nascent modular building industry, or if the agency will be contracting with public or private sector developers that have agreed to source their materials from these firms.
And while the government has said that it sees fostering factory-built housing as a means of creating new markets for Canadian-produced building materials such as steel, aluminum and wood, it’s not yet clear which goal is more important: stoking demand for Canadian building materials or generating orders for modular companies that produce factory-built components.
Mr. Carney tours a modular home being built by Caivan Homes.Justin Tang/The Canadian Press
Brandon Searle, who heads the University of New Brunswick’s Off-site Construction Research Centre, says Ottawa officials have told him that they need to confront structural questions, such as kick-starting markets for insurance and construction financing products designed for factory-built housing.
Federal officials, he adds, also recognize that modular firms require a steady stream of orders to justify investing in automation equipment or larger factories. “Creating a bit of a sustainable demand potentially will de-risk some of this for the modular prefab industry,” says Mr. Searle. “We need that assurance that there’s going to be that demand longer term.”
A spokesperson for Housing Infrastructure and Communities Canada told The Globe and Mail last week that the government solicited stakeholder feedback over the summer and will provide more details in the fall. “Build Canada Homes is committed to fostering a collaborative environment where various delivery models – including those led or supported by private developers – can contribute meaningfully to the supply of affordable housing.”
BCH’s modus operandi is obviously a work-in-progress, but there are basically two models currently in use:
Municipal land-development agencies like the City of Toronto’s CreateTO typically contract out projects to private developers that have agreed to construct housing on public land, subject to various conditions, such as affordability levels. Since Mayor Olivia Chow came to office in 2023, the city has also set up a municipal development division, pursuing its own projects without development partners; these will be operated by non-profits or co-ops.
Which one BCH’s new CEO, Ana Bailao, a former Toronto deputy mayor and housing czar, selects remains to be seen, but the choice could make a big difference in the evolution of Mr. Carney’s goal to drive factory-built housing.
If BCH decides to parcel out smaller portions of that first tranche of 4,000 homes to individual builders, it will likely issue those contracts on the condition that the developers source their materials from modular or prefab firms that rely on Canadian-made components. But if BCH decides to establish itself as the developer of all 4,000 units, it can take advantage of economies of scale and place larger orders with a narrower range of suppliers.
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Prime Minister Mark Carney launched Build Canada Homes, a new federal agency, in September.Justin Tang/The Canadian Press
The prefab modular industry has its own views on how the government should proceed, some focusing on the chicken-and-egg problem facing a nascent industry that will need to make significant capital expenditures – e.g., securing large factory sites and the state-of-the-art automated production equipment that mainly comes from a handful of European suppliers – to produce at the scale Ottawa expects.
In late August, the Canadian Industrialized Construction Coalition, a newly created lobby group, sent federal decision-makers a brief pressing Ottawa to establish a $1-billion fund to invest in the sector. CCIC, which was set up by Assembly Corp. CEO Geoff Cape, also wants to see BCH aggregate large-scale orders to create certainty for manufacturers.
“My understanding, and I’d say it’s likely fairly accurate, is that about 15 to 20 per cent of the money has been dedicated to improving the capacity of modular builders, and the balance of it has been dedicated to financing projects,” adds Julian Bowron, an industry veteran and chief technology officer for METALOQ.
Yet Mr. Searle isn’t convinced that grants for modular builders are the way to go, and says the federal government has various other pools of funding for innovation-oriented ventures.
As well, many of Canada’s prefab housing players are small-scale, specialized firms, and some worry that they’ll be locked out of a mass-production procurement program.
“It’s something that we think about all the time,” says Jackson Wyatt, founder and CEO of CABN, a firm that produces prefab cottages made from mass timber, and has also designed net-zero demonstration projects in partnership with the Federation of Canadian Municipalities. But, he adds, “It’s a good problem to have in terms of rising to the occasion to add capacity.”