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 22, 2017
Zaha Hadid Architects residential development takes a page from a classic Bradbury tale
The buildings are on an elevated platform and the surrounding walkways are suspended so as not to disturb the surrounding ecosystems.
Multifamily Housing | May 19, 2017
Above + Beyond: condo tower built atop parking structure
How designers figured out a way to nestle an 18-story condo tower on top of an existing parking structure in Hawaii.
Multifamily Housing | May 17, 2017
Swedish Tower’s 15th floor is reserved for a panoramic garden
C.F. Møller’s design was selected as the winner of a competition organized by Riksbyggen in Västerås.
Mixed-Use | May 17, 2017
The Lincoln Common development has begun construction in Chicago’s Lincoln Park
The mixed-use project will provide new apartments, condos, a senior living facility, and retail space.
High-rise Construction | May 15, 2017
Construction begins on 47-story luxury tower in Chicago’s South Loop
The glass tower is being built at 1326 S. Michigan Avenue.
Multifamily Housing | May 10, 2017
May 2017 National Apartment Report
Median one-bedroom rent rose to $1,012 in April, the highest it has been since January.
Multifamily Housing | May 10, 2017
Triple Treat: Developer transforms mid-rise into unique live-work lofts
Novus Residences’ revolutionary e-lofts concept offers tenants a tempting trio of options—‘live,’ ‘live-work,’ or ‘work’—all on the same floor.
Multifamily Housing | May 3, 2017
Silicon Valley’s high-tech oasis
An award-winning rental complex takes its design cues from its historic location in Silicon Valley.
Multifamily Housing | May 2, 2017
Multifamily housing: 7 exciting, inspiring innovations [AIA Course]
This AIA CES course features seven novel approaches developers and Building Teams are taking to respond to competitive pressures and build more quickly and with more attractive offerings.
Multifamily Housing | Apr 26, 2017
Multifamily amenity trends: The latest in package delivery centers
Package delivery centers provide order and security for the mountains of parcels piling up at apartment and condominium communities.