How Labour Shortages are Influencing CRE Development Timelines
5 min read
The commercial real estate (CRE) sector will continue to evolve in 2025, but a widespread labour shortage remains a significant challenge. Developers, contractors, and investors feel the impact, as delays and rising costs reshape project planning and execution. Labour shortages, affecting everything from construction workers to project managers and specialty trades, increasingly influence development timelines and the broader market.
We’re sharing how this is affecting project schedules, what It means for the commercial real estate market, and the strategies developers are using to adapt below.
Why Labour Shortages Are Occurring
Labour shortages in CRE development stem from multiple factors. These include an aging workforce, fewer young workers entering skilled trades, shifting immigration patterns, and increasing demand for construction in multiple sectors. Additionally, economic volatility has caused many workers to seek more stable industries, further straining the talent pool available for CRE projects.
Impact on Development Timelines
The most immediate effect of labour is the delay of project timelines. With fewer workers available, tasks typically completed in weeks now may take a couple of months. Projects are not only starting later but often face unexpected slowdowns once underway, causing a domino effect on budget and occupancy targets.
Delays are also increasing financing costs. Extended project timelines can mean higher interest payments and additional holding costs, putting more pressure on project profitability. For tenants and buyers eagerly awaiting space, this means pushing back operational plans, sometimes with significant financial consequences.
Rising Construction Costs
Labour shortages affect timing and drive up construction costs. With workers in high demand, wages rise, and contractors are forced to offer more competitive packages to secure skilled labour. These increased costs are often passed on to property buyers, tenants, or investors, making developing and leasing commercial spaces more expensive.
How Developers Are Adapting
Many CRE developers are adopting innovative strategies to manage the effects of labour shortages. Some are increasingly turning to modular construction and prefabricated components, which can reduce on-site labour needs. Others invest in technology, such as Building Information Modelling (BIM) and project management software, to streamline processes and improve efficiency with a limited crew.
Developers are also strengthening their relationships with contractors and suppliers, locking in labour and materials early to avoid future disruptions. Workforce development initiatives, such as partnering with local colleges and trade schools, are another long-term solution to address labour supply issues at their root.
Labour shortages are unlikely to disappear overnight. As the commercial real estate sector continues to expand in key markets, developers must plan carefully to anticipate delays and additional costs. Flexibility, early planning, and strategic investments in innovation will be essential to navigating this ongoing challenge.
References
Demarco, Z. (2024, January 30). Construction time grows, building quality slips amid Canada’s skilled labour shortage. STOREYS. https://storeys.com/construction-timeline-quality-labour-shortages/
Kaufman, D. (2025, January 27). Labor shortages: A critical challenge for real estate developers and investors in 2025. Medium. https://medium.com/@danielkaufmanrealestate/labor-shortages-a-critical-challenge-for-real-estate-developers-and-investors-in-2025-0daeec31daa3
Canada’s construction industry faces urgent labour shortages: What’s next? - directpath Canadian immigration. DIRECTPATH CANADA. (2024, October 9). https://directpathcanada.com/canadas-construction-industry-faces-urgent-labour-shortages-whats-next/
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