McKinsey & Company, the international corporate consulting firm, has issued a new research study, “Modular construction: From projects to products.” 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.
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.
SEE ALSO: Almost everything you wanted to know about industrial construction
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 multifamily—we sure could use them. But with the U.S. producing at best $60-70 billion in multifamily construction, it’s 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 you’re keeping score) had to do with the current offsite share of housing by country, i.e., how much “factory-produced” 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.
It’s not all doom and gloom for the U.S. Modular, prefab, or “industrial construction” 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 designer’s desktop directly to the offsite factory.
Another reason why we’ll see more industrial construction in multifamily is the dire shortage of skilled labor. As the McKinsey experts note, shifting to offsite manufacture is cheaper—and “it may even attract new people into the workforce who do not wish to move from one construction site to another following projects.” Or who’d rather be in a nice cozy factory than freezing their butts on a job site in the middle of a Minnesota winter.
But don’t expect huge savings in initial costs. The most important benefit of offsite construction, when done right, is reliability—the assurance that a wall system or an entire room module can and will be delivered on time and to high level of specification.
Related Stories
Multifamily Housing | Sep 21, 2018
A place of ‘voluntary and cheerful resort’
A project team soldiers on in the wake of a nightmarish turn of events.
Multifamily Housing | Sep 19, 2018
Multifamily market trends 2018: What the experts are saying
The growth of keyless entry solutions and demand for oversized units are among the trends and ideas shared at Marcus & Millichap’s 2018 Multifamily Forum in Chicago.
Multifamily Housing | Aug 29, 2018
Brighton Marine is the largest veterans’ development constructed in Boston since World War II
The Architectural Team designed the project.
Multifamily Housing | Aug 27, 2018
5 noteworthy multifamily projects: summer 2018 edition
The 5 buildings highlight MFDC's summer issue noteworthy projects section.
Multifamily Housing | Aug 20, 2018
$53 million Chamberlain apartments will comprise six buildings, three new and three renovated
The project’s groundbreaking was held on July 19.
Multifamily Housing | Aug 17, 2018
Sound advice on multifamily construction
Four leading experts tell how to ensure your next multifamily project achieves acoustic privacy.
Multifamily Housing | Aug 15, 2018
Memphis construction: Can this city become the next Austin?
One local design firm is trying to make it happen.
Multifamily Housing | Aug 8, 2018
Flyin' high: Humphreys & Partners Architects keeps soaring to new heights
HPA, which reported $78.2 million in multifamily design fees in 2017, ranks as the nation’s largest multifamily design firm.
Multifamily Housing | Aug 7, 2018
Even after redevelopment, the iconic 'Chicago Tribune' sign will remain at 435 N. Michigan Ave.
The newspaper and the building's new owners reached a settlement.
Multifamily Housing | Aug 2, 2018
The recipe for bicycle kitchens
Bike storage and workshop spaces are rapidly turning into full-service social amenity spaces in multifamily projects.