McKinsey & Company, the international corporate consulting firm, has issued a new research study, âModular construction: From projects to products.â Written by an international team, it discusses a wide range of building sectors, but its main focus is multifamily.
The authors claim that modular construction could claim $45 billion of the total $277 billion new-build multifamily market by 2030 in the U.S. and Europe at moderate penetration and save $6 billion a year in costs.Â
Assuming the U.S. represents at least half of the market (probably more like 60-70%), those would seem to be very attractive numbers for apartment, student housing, and senior living construction, where modular construction works best.
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SEE ALSO: Almost everything you wanted to know about industrial construction
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But I have some problems with the McKinsey findings. To start with, I wonder where they got the $277 billion figure for multifamily construction in the U.S. and Europe by 2030. That looks really high to me. It would be a godsend if the U.S. could be producing half of that, say, $130 billion or more of apartments and other forms of multifamilyâwe sure could use them. But with the U.S. producing at best $60-70 billion in multifamily construction, itâs hard to see a doubling of that rate of construction in the next decade.
The McKinsey numbers may also be weighted toward the rest of the world, less so toward the U.S. One of the charts I found most intriguing (page 22 of the report, if youâre keeping score) had to do with the current offsite share of housing by country, i.e., how much âfactory-producedâ housing construction is going on in various countries.
The global leader turns out to be the trifecta of Finland-Norway-Sweden, where 45% of housing construction is produced off site, followed by Japan (15%), Germany (10%), China (6%), and Australia and the U.K. (each 5%). The U.S.? Three percent.
Itâs not all doom and gloom for the U.S. Modular, prefab, or âindustrial constructionâ is starting to catch on, particularly in student housing and the low- to mid-rise apartment sector. One reason for this is the pervasive adoption of Revit and other 3D modeling tools, which make it relatively easy to transfer data from the designerâs desktop directly to the offsite factory.
Another reason why weâll see more industrial construction in multifamily is the dire shortage of skilled labor. As the McKinsey experts note, shifting to offsite manufacture is cheaperâand âit may even attract new people into the workforce who do not wish to move from one construction site to another following projects.â Or whoâd rather be in a nice cozy factory than freezing their butts on a job site in the middle of a Minnesota winter.
But donât expect huge savings in initial costs. The most important benefit of offsite construction, when done right, is reliabilityâthe assurance that a wall system or an entire room module can and will be delivered on time and to high level of specification.
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