Construction firms filed 208 business insolvencies in Canada in the first quarter of 2026, 17.0 percent of all business filings and more than any other sector. Total business insolvencies fell 7.5 percent that quarter. Construction rose. Between an aligned multiplex deal and a profitable completion sits 18 to 24 months of execution, and that stretch is where these projects are actually won or lost.
Last week I ended on alignment. A financeable multiplex needs enough capital, contingency and time to complete the business plan, and the investor’s position should fit their wealth, liquidity and experience. This week I want to look at what happens after that alignment is in place, because on its own it is still only a plan on paper.
What the court filings actually say
The clearest evidence for that view is coming out of the insolvency courts, and it is worth reading carefully because the direction is counterintuitive.
Total business insolvencies in Canada fell 7.5 percent year over year in the first quarter of 2026, to 1,232 filings. Construction went the other way. It filed 208, up 15 from the same quarter last year, and took 17.0 percent of all business filings, the largest share of any industry. When the overall trend improves and one sector still deteriorates, that sector has a problem of its own.
Two Vancouver receiverships this spring show what that looks like up close.
Chroma, at 1888 Scotia Street, is a completed 10-storey building with 133 residential strata units and 8 commercial units. Institutional Mortgage Capital Canada put it into receivership on March 30, 2026. Total indebtedness was about $79.3 million as at January 19, 2026. Construction had finished in April 2025. By the receivership application, 69 of 133 residential units were occupied and 2 of 8 commercial units were leased. The lender’s material described leasing performance that “lagged materially” and payment defaults that emerged shortly after funding, with roughly $1.4 million in payment deficiencies accumulating between August 2025 and February 2026. Rental income was not enough to service the debt.
Joyce 2 followed. On April 27, 2026 the BC Supreme Court granted a receivership order over the entities behind a near-complete rental development at 5083 Joyce Street: about 360 rental units, 4,500 square feet of retail and 87 underground parking stalls. The senior secured lender, National Bank, had issued a notice of default in early January 2026 listing at least six defaults: missed interest payments, unfulfilled equity infusion obligations, unreported cost overruns, failure to deliver financial reporting, construction lien registrations, and material adverse change.
These are large projects, much bigger than a multiplex, and I want to be fair about that. But read the Joyce 2 list again. Nothing on it is about zoning, land value or the housing market. Every item is an operating failure: costs not tracked, overruns not reported, equity not funded, reporting not delivered. Those failure modes do not require a 360-unit tower. They fit comfortably inside a six-unit project on a 50-foot lot, and in my experience they show up there for the same reasons, just without a court file to make them public.
The cost environment leaves no room for sloppiness
Execution matters more right now because costs are still moving against you.
Residential construction costs across the 15-census-metropolitan-area composite rose 3.0 percent year over year in the fourth quarter of 2025, and 0.4 percent quarter over quarter. Statistics Canada attributed part of that to materials, and part to something harder to budget around: “Labour shortages and elevated wages continued to place further upward pressure on construction costs, particularly in the skilled trades.” Vancouver residential was actually down 0.3 percent for the quarter, so the local read is flatter than the national one. That is a pause, not a reversal.
The longer view is the sobering one. Residential building construction prices across urban Canada are up almost 70 percent from the third quarter of 2019 to the third quarter of 2025. Overall Canadian inflation over the same period was 17.2 percent. ICBA Economics, citing Desjardins, notes that labour costs are now the primary driver rather than materials.
| Measure | Figure | Period | Source |
|---|---|---|---|
| Residential construction prices, 15-CMA composite | +3.0% year over year | Q4 2025 | Statistics Canada, released Jan 27, 2026 |
| Same index, quarter over quarter | +0.4% | Q4 2025 | Statistics Canada |
| Vancouver residential, quarter over quarter | -0.3% | Q4 2025 | Statistics Canada |
| Residential building prices, urban Canada | +70% (approx.) | Q3 2019 to Q3 2025 | ICBA Economics, Jan 22, 2026 |
| Overall Canadian inflation | +17.2% | same period | ICBA Economics, citing Desjardins |
A budget set at acquisition meets a different market at completion. That is why contingency exists, and it is also why contingency has to be governed rather than quietly spent in the first year.
Now add the exit. Vancouver’s vacant new inventory declarations under the Empty Homes Tax rose from 261 in 2024 to 597 in 2025, about a 130 percent increase, according to a City of Vancouver staff report. Finished homes are sitting longer before they sell or lease. That is the same absorption problem I wrote about when CMHC’s forecast came out. Slower absorption stretches the period during which every operating mistake keeps costing you money.
In this market, the projects that finish profitably will be the ones that were run well, not just the ones that were bought well.
People, controls, systems
So what does operating capability actually consist of? I group it in three parts.
People. A multiplex is a small project that needs the same professional bench as a large one: a builder with completed multiplex projects behind them, an architect who knows the form and the local approval process, someone accountable for managing the schedule and the budget week to week, and a REALTOR® who understands how these units actually sell in that neighbourhood. The builders retreating from this market right now had capital and land. What many of them lacked was depth on this bench.
Controls. This is the discipline that keeps a project honest while it is underway. Budgets tracked against actuals monthly, not reconstructed at the end. Construction draws released against verified milestones. Change orders priced and approved in writing before the work happens. Contingency treated as a governed reserve with a clear rule for when it can be drawn. And regular reporting to the people whose capital is in the deal. The Joyce 2 default list is a useful reminder of what happens when reporting stops: lenders assume the worst, and they are usually right to.
Systems. The least glamorous part, and the part most often skipped at this scale. Cost and schedule tracking that someone actually maintains. A communication rhythm so investors hear about problems from the operator, not from a lien search. And the administrative machinery I wrote about in Issue #2, the capital accounts, records and compliance that pooled-capital structures legally require. Systems are what let a small project be run with large-project discipline without hiring a large-project head office.
Where this sits for VanPlex
This operating layer is the substance of the general partner role in our co-development structures. Selecting the lot is the beginning of the work, not the end of it, and the 18 to 24 months between acquisition and stabilization is where we spend most of our effort. That is why we treat operating capability as part of the underwriting, alongside the land and the capital. PlexRank™ narrows 205,047 lots down to the small number worth underwriting. The operating layer is what decides whether the one you pick actually performs.
Four questions to ask before you commit capital
When you evaluate a multiplex opportunity, the questions about the operator deserve the same weight as the questions about the lot.
- Who has completed this kind of project before, and can you see those projects?
- How are costs tracked against budget, and how often will you see them?
- What has to happen before contingency is touched, and who approves it?
- What do you receive in writing, and when?
An operator who answers those questions easily has probably already built the capability. An operator who bristles at them is telling you something too.
Next week I plan to turn to the land market itself. Multiplex land sales in Vancouver fell from 124 in 2024 to 46 in 2025, and total land value from $303 million to $114 million, while the average value per deal held roughly flat near $2.4 to $2.5 million (CBRE, February 2026). Volume collapsed. Pricing did not. That raises an interesting question about whether multiplex land has actually repriced, and what entry looks like for patient capital in a standoff between disciplined buyers and unhurried sellers.
Investor Intelligence Principle #5
A multiplex project does not earn its projected return on the day the lot is bought or the capital is raised. It earns it through execution. Investors should weigh the operator’s people, controls and systems as carefully as they weigh the lot itself.
