Major construction projects have been lacking since the completion of the new terminal building at LF Wade International Airport — but that is changing this year.
The long-awaited refurbishment of the Fairmont Southampton, the construction of Brookfield Re’s nine-storey office building on Front Street, and the new government-led Morgan’s Point development will generate significant work.
This comes at a time when the industry has been through a tumultuous few years, featuring a surge in residential work arising from the pandemic, rampant materials inflation and supply-chain issues, a spike in interest rates that has created project financing challenges, and the depletion of local aggregate supplies that has caused the cost of concrete block to rocket.
Despite the challenges, local contractors remain busy.
Alex DeCouto, president of construction management company Greymane, said businesses continued to invest in building and renovation — a promising indicator of confidence in the economy.
Trade could be even brisker, but for a growing backlog of building permit applications awaiting approval by the Planning Department, he added. Having tracked statistics, Mr DeCouto found that of the 830 building permits applied for through 2022 and 2023, only 443 were issued, a conversion ratio of 53 per cent, leaving a cumulative 387 applications outstanding by the end of last year.
“They’re only approving 40 or 50 per cent in a given month and they’re not catching up,” Mr DeCouto said. “It’s a concern because so many things are in play in driving whether construction starts or not. It can be quite delicate to put together the capital to support one of these projects and then if they’re forced to wait for three or four months, with interest rates as they are, they may decide it’s taken too long.”
It was apparent Planning needed more staff, he said, and as the delays added to already considerable construction inflation, the shortfall needed to be addressed urgently.
Concrete costs, which surged by about 50 per cent with the loss of local aggregate supplies, will remain elevated, Mr DeCouto said.
“We might find somewhere on the island where we could dig out some more, but ultimately, we’re getting our aggregate from somewhere else and that’s expensive. Every product we use in construction has to be brought in from overseas and that really means we’ll always have an affordability problem.”
While the major projects will bring welcome business to local contractors, Mr DeCouto said the
island did not have the capacity to provide much of the extra labour needed.
“Right now between 25 and 30 per cent of construction industry workers are here on work permits,” he
said. “So when you start a large project that immediately requires hundreds of extra workers, then most of them are going to have to come in from off island.
“There may be opportunities for locals to get a higher-paying job because of the increased activity, but I don’t see construction taking workers from other industries.”
He estimated the Fairmont job, which the Government has estimated will create about 700 jobs during the construction phase, will have a peak number of about 400 workers on site at one time, while the Brookfield tower was likely to peak at below 100.
In brief, the details of the major projects are:
Fairmont Southampton
Closed since the Covid-19 pandemic shut down Bermuda’s tourism industry in 2020, the Fairmont Southampton and the 700-plus jobs it provides has been sorely missed. After a lengthy and controversial planning saga, ground was finally broken at the beach club in January and renovations started at the hotel at the start of February.
The Miami-based investment group Gencom and its local subsidiary Westend Properties are behind the vast project, with construction work at the hotel expected to take about 20 months.
By the end of 2025, half of the rooms are expected to be open to guests and public spaces open.
A host of local contractors were involved from the off, including Atlantic Mooring, BCM Construction and Insulcon Construction, On-Site Engineering, Performance Construction and architectural consultant HDH Ltd.
The Fairmont facelift is only part of a bigger project outlined in plans approved under a Special Development Order that will result in the building of up to 159 tourism and 91 residential units in buildings of up to four storeys, a project that will continue to generate construction work for years to come.
Brookfield Re tower
The nine-storey tower that will house Brookfield Re’s new global headquarters on Front Street will also be home to the company’s Bermudian-domiciled affiliates, Brookfield Property Partners, Brookfield Infrastructure Partners, Brookfield Renewable Partners and Brookfield Business Partners. The plans also provide for retail space on the ground floor and along Chancery Lane.
The Development Applications Board rejected the plans, with their reasons including the “excessive” height of the building, but Vance Campbell, Minister of the Cabinet Office, overturned the DAB ruling to give the green light to the project.
Brookfield is a global private equity, insurance and infrastructure giant, which describes itself as a “pioneer of long-term impact”. That could certainly be true in Hamilton, where its building could well set a precedent for building upwards rather than outwards in the city — an approach advocated by many who see it as a way of meeting Bermuda’s development needs while protecting green space.
Morgan’s Point development
Rising as a phoenix from the ashes of the failed project to build a plush resort at Morgan’s Point is a housing development. Legislation to create a government-owned company to oversee the redevelopment of the 37-acre property was passed in 2022.
As the Government works to extract value from the site, it intends to build a wide spectrum of rental units “to address housing needs at all levels”. The first phase of work will be to convert five partially completed buildings into 35 new high-end units aimed primarily at international business workers.
