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 | May 23, 2018
Yankee Dandies: Century-old New England mills become multifamily residences
Having long outlived their original uses, two century-old New England mills have become valuable community assets once again—as multifamily residences.
Multifamily Housing | May 16, 2018
Pampering the pups: Why dog-washing stations are a must-have in multifamily developments
Self-serve dog-washing stations are reinforcing strong bonds between multifamily residents and their beloved canines.
Mixed-Use | May 16, 2018
Los Angeles mixed-use building uses prefabricated wood frame to reduce costs
SPF:architects designed the building.
Multifamily Housing | May 14, 2018
Yardi Matrix report shows U.S. rent surge in April
Year-over-year rent growth leaders in April were Orlando, Fla., Sacramento, Calif., Las Vegas, Tampa, Fla., and Phoenix.
Multifamily Housing | May 9, 2018
6 noteworthy projects: Transit-oriented rental community, micro-unit residences, and an office tower becomes a mixed-use community
These six recently completed projects represent some of the newest trends in multifamily housing.
Multifamily Housing | May 1, 2018
Boutique condo provides 41 exclusive residences in Miami’s Bay Harbor Islands
Revuelta Architecture International designed the building.
Multifamily Housing | May 1, 2018
Call for experts: We’re looking for designers and builders of bicycle storage facilities for multifamily
The editors of Multifamily Design+Construction magazine seek experts for a "how-to" article in the next issue.
Multifamily Housing | Apr 30, 2018
For housing costs, consider all occupancy costs - not just property taxes
It's inaccurate to focus on property taxes as a percentage of home value without acknowledging the actual cost of housing to which this percentage is applied.
Multifamily Housing | Apr 27, 2018
1912 publishing house becomes luxury residential condominiums
Gottesman Architecture and GSArch designed the renovated building.
Adaptive Reuse | Apr 26, 2018
Edison Lofts building is New Jersey’s largest non-waterfront adaptive reuse project
Minno & Wasko Architects & Planners designed the building.