Growth meets constraints
Canadian Construction Projects Face Power and Workforce Constraints Despite 2.6% Growth
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Canada's construction industry is set to grow by 2.6% in 2026, driven by public investment in data centers, life sciences, and high-tech industrial projects, according to Linesight. But that growth comes with a catch: power shortages, slow planning approvals, and a shrinking workforce are making it harder to actually deliver projects on time.
Construction inflation is expected to run between 3% and 4% this year. That pressure lands against a modest economic backdrop — Canada's GDP is forecast to grow just 1.5% in 2025, according to Linesight. The gap between what's being built and what can realistically be built is widening fast.
AI Data Centers and Life Sciences Lead the Building Boom
The federal government is pouring money into digital and biomedical infrastructure. Budget 2025 set aside $925.6 million over five years for public AI infrastructure, according to Calgary Sun. Between January and February 2026, Ottawa issued a call for proposals targeting large-scale AI data centers of at least 100 megawatts — enough power to run a small city.
Life sciences are also booming. Canada's Biomanufacturing Strategy, launched in 2021 after COVID-19 exposed supply chain gaps, has kept investment flowing into vaccine plants, therapeutics labs, and research facilities. Wendy Zatylny, CEO of BIOTECanada, called 2026 a "generational moment" for the sector, praising the alignment between federal and provincial strategies, according to Sault Star.
Power Grid Strain Puts Biggest Projects at Risk
The single biggest obstacle to growth is electricity. AI data centers consume power on par with small towns. In May 2026, Manitoba Premier Wab Kinew rejected a major data center project south of Winnipeg. He cited high energy use and few permanent jobs. His message was blunt: tech infrastructure carries "hidden costs" that local grids and ratepayers absorb, according to Cochrane Times Post.
Patrick Ryan, Executive Vice President of Americas at Linesight, warned that delivery certainty is tightening. "Projects that secure power early are better positioned to progress with confidence," he said. In other words, if you don't lock in your electricity supply before breaking ground, your timeline is already in trouble, according to Fairview Post.
Canada Needs Up to 520,000 More Construction Workers by 2030
Canada's construction workforce is aging out fast. Over 270,000 workers — roughly 15% of the 2024 workforce — are expected to retire by 2034. To hit federal infrastructure targets by 2030, Canada needs between 410,000 and 520,000 additional workers, according to Mitchell Advocate. That gap won't close on its own.
The industry is adapting. Modular construction and AI-driven project planning are becoming standard tools, not experiments. The Canadian Construction Association reported a 9.8% rebound in building permits in Q4 2025, a strong signal heading into 2026. But Rodrigue Gilbert, the association's president, cautioned that builders are "adapting to rising costs, weaker population growth, and geopolitical uncertainty," according to Woodstock Sentinel Review.
Cost Gaps Widen Between Calgary and Toronto as Budgets Tighten
Not all Canadian cities are feeling the same pressure. Calgary and Edmonton saw construction costs climb 4% year over year in early 2026. Toronto and Vancouver costs softened, partly because high-rise residential development stalled due to interest rate resets and weak pre-sales, according to Sault Star. The Building Construction Price Index rose 4.1% nationally in early 2026.
Critics are watching the Canada Strong Fund — a $25 billion federal investment vehicle funded by borrowed money — with skepticism. The Macdonald-Laurier Institute noted it differs sharply from Norway's surplus-backed model. Canada is borrowing to invest, a bet that construction-led growth will pay off before the bills come due, according to Cochrane Times Post.
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