Apartment development has been surging nationwide, with many markets reaching completion levels not seen in decades. Yet, despite this high-level of activity, changes in construction have been relatively modest and the industry has been slow to adopt new technologies, processes and systems. However, apartment firms face a series of challenges ranging from rising costs to risk mitigation and shifting consumer preferences that may drive innovation and advances in multifamily construction.
Of greatest concern are the unrelenting increases in costs. Recent data from the Associated General Contractors of America shows an 8.1 percent year-over-year increase in multifamily construction prices compared to just a 2.8 percent increase of the Consumer Price Index. Some individual costs for critical building materials show even greater escalations, with lumber and plywood at 18.3 percent, steel mill products at 12.3 percent and aluminum products at 20 percent.
Moreover, changes in U.S. trade policy could further exacerbate cost increases for key construction materials. The residential building sector was already trying to cope with lumber tariffs of roughly 20 percent that were imposed late last year when the Trump administration levied 25 percent tariffs on imported steel and 10 percent tariffs on aluminum.
These rising costs are not only affecting multifamily firms’ balance sheets, but also limiting the industry’s ability to produce enough apartments, at affordable price points, to meet growing demand. In response, companies are exploring new systems and technologies that aim to improve the building process while reducing costs.
One often talked about option is the use of prefabrication. While the purported benefits of modular construction have been long discussed, adoption has lagged in the multifamily space. While some apartment builders are taking a second look at traditional modular construction, others are increasingly looking past the manufacture of full units to the use of individual, prefabricated building systems and components.
Prefabrication offers builders customization and boasts efficiencies in design and manufacturing that promise faster installation times, reduced waste and overall cost savings. Off-site production of building components also addresses serious concerns over the availability and cost of labor.
This reconsideration of prefabrication is facilitated by advances in other construction technologies like sophisticated building modeling and precision manufacturing. Features like virtual 3D modeling, 3D laser cutting and robotic automation provide a level of accuracy and efficiency that cannot be replicated in a traditional setting.
Prevention and protection
Risk mitigation is the second significant driver of change in multifamily construction. The inherent safety and security hazards of both the building process and construction sites demand that property owners and builders regularly assess the threat environment and possible solutions.
Multifamily builders are increasingly using new technologies in monitoring and detection to protect employees and the jobsite alike. Next-generation surveillance tools, on-site sensors, infrared scans and integrated alert systems can both warn of dangers and provide real-time notifications of issues ranging from fire detection to water damage and trespassers. The latest offerings in this area even conceptualize the use of drones to deliver comprehensive site monitoring capabilities not achievable using conventional methods.
Here, too, there is a role for prefabrication. Moving hazardous work like cutting and welding off-site can reduce the risk of injury and diminish site conditions that contribute to potentially catastrophic events like a site fire.
Similarly, while the use of advanced building modeling tools and digital technology has been touted for improving efficiencies and reducing costs, multifamily designers and builders are also embracing these technologies for their risk avoidance capabilities. For example, 3D modeling and cutting-edge virtual reality applications can predict and better manage potential construction problems before they reach the project site.
Finally, a recognition of evolving consumer needs is compelling changes to how apartments are being built. Technology is transforming the built environment faster than ever, presenting a significant challenge for properties with decades-long lifespans. In an effort to guard against obsolescence, apartment firms are considering ways to ensure future adaptability in communities during initial construction.
For example, there is tremendous uncertainty about the future transportation requirements of residents. Many believe parking needs will significantly decline in light of ride-hailing and ride-sharing service companies and the possibility of autonomous vehicles, along with already changing development patterns that promote walkability and mass transit. In response, some are exploring options that would enable parking areas to be easily modified for other uses. This includes structural alterations, extra capacity for electrical and other building systems and design choices that provide future flexibility for the space.
Multifamily construction has a tremendous potential for new and innovative building approaches. Although adoption of advanced systems and technologies can be gradual, financial considerations, liability concerns and operational needs can drive industry acceptance. To that end, NMHC’s members with construction operations are actively working to identify major areas of need while vetting new technology and systems solutions. While the path is uncertain, forward-looking firms are working to build the apartment of the future today.
Paula Cino is vice president of construction, development and land use policy at the National Multifamily Housing Council in Washington, D.C. She can be reached at [email protected].
Read the October 2018 issue of MHN.