Where does construction innovation matter most?
By: Hannah Gable, Director of Strategy and Operations
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We’re trying something new at Ivory Innovations – sharing a perspective about a recent trend or issue area we’ve seen in the housing world. But we don’t just focus on issues at Ivory; we focus on solutions. So in each post you’ll hear about some of the innovators we’re meeting through the Ivory Prize and how they’re changing the industry.
This is a perspective. We’d love to hear your thoughts.
Where does construction innovation matter most? A review of onsite and offsite automations.
Current Consolidation in the Production Homebuilder Market
Recently, we’ve seen increasing consolidation in the production homebuilder market – Sekisui House and MDC Holdings, Dream Finders and Crescent Homes, and Landsea Homes and Antares Homes, just to name a few. Many predict this trend will continue, with Maraget Whelan, CEO of Whelan Advisory, anticipating 2024 “will be a record year for merger and acquisition activity”.
As new partnerships form, and others re-evaluate their position in the market, homebuilders will look for an edge – one way this often happens is through investments in innovation. Greystar, a US-based real estate developer and manager with $74B in assets under management, is an example of this shift. Last spring, the company launched its modular construction business, “Modern Living Solutions”, with the purchase of a manufacturing facility in western Pennsylvania.
Investing in Innovation Amidst Increasing M&A Activity
Given the continued M&A activity and increasing focus on innovation, what kinds of solutions should we promote? Many highlight the promise of automation – continued labor shortages, lengthy project schedules, heavy equipment, and high costs make the industry a strong fit for automation. While there is widespread agreement that we need more innovation in construction, we have seen two distinct ecosystems with differing theses for where those automations should occur – onsite, to replace traditional physical tasks (laying bricks, assembling drywall, etc.), vs. offsite, to build homes in factories using industrialized construction methods.
Should we focus on incremental innovation to improve efficiencies within the existing system of onsite, stick built construction? Or, look to the transformational and disruptive, albeit capital-intensive and complex, promise of offsite construction?
Why Innovation is Crucial in Both Onsite and Offsite Construction
My perspective is this: we need transformational efficiencies both onsite and offsite – our housing shortage is too great to focus only on one or the other.
For example, Autovol, Connect Homes, and Volumetric Building Companies are offsite manufacturers using a myriad of automations, namely robotics to improve the precision and speed of factory construction. When compared to traditional construction, building offsite can contribute to 20% savings in cost and 20% to 50% in project time. But as of September 2023, only 2% of single family homes were constructed using offsite building methods.
So we also need to look at transforming the other 98% of housing starts. Some examples of onsite automation include Diamond Age 3D and BamCore. Each represent trends we’ve seen across onsite innovation – the use of 3D printing and nontraditional building materials to reduce costs and improve environmental sustainability. Diamond Age utilizes 3D printing and robotic arms, establishing a small, factory-like setting onsite to save time and money. BamCore has patented an engineered wood panel to create a carbon-negative framing system for residential structures up to five stories.
How Automated Construction Innovations Are Being Implemented
In our most recent Ivory Prize nomination cycle, we were excited to see the emergence of a third category: innovations that can be used both onsite and offsite. Two companies demonstrate this opportunity: Canvas and KitSwitch.
Canvas
Canvas is a construction robotics company with a flexible approach to drywall finishing. Combining the skills and expertise of trained workers with technology, Canvas makes drywall finishing work better, faster, safer, and more consistent. The drywall finishing process is a critical step in homebuilding – whether building onsite or offsite – and Canvas cuts a five-day process down to two.
2. Kit Switch
Kit Switch creates modular apartment interiors, starting with a “kit of kitchen” module, that can be used for adaptive reuse projects or new builds. Their product makes it more financially feasible to convert underutilized space to housing with a high quality, easy-to-assemble, and sustainable module. Given the variety of applications, Kit Switch interiors bring innovation to stick built homebuilding, offsite manufacturing, and retrofit development.
Driving Efficiency and Affordability: The Future of Construction Automation
As production homebuilders seek to define new and unique competitive advantages, and the excitement around construction automation grows, we are eager to see more innovation, disruption, and investment across the three categories of automation I’ve outlined: onsite, offsite, and solutions that fit both. The time, energy, and resources associated with the construction and real estate development process continue to be a key area driving housing unaffordability in the US. We are hopeful for continued creativity in this area, and excited to see what 2024 holds.
The perspective above is my own, and does not represent a viewpoint of Ivory Innovations.