- July 1, 2019: Vol. 31, Number 7

En masse: Mass timber is poised to be faster, cheaper and greener than traditional construction materials

by Reg Clodfelter

The scene looked like an Erector Set made for Paul Bunyan himself. Cranes lifted and placed large, prefabricated timber components that were designed and crafted off-site to fit like puzzle pieces into their preordained positions in the skeleton of Brock Commons Tallwood House, in Vancouver, British Columbia. Although the build time on the 18-story hybrid building at the University of British Columbia was not quite the 70 minutes you would see with a traditional Erector Set, the project was completed a mere 70 days after the mass-timber components arrived on site — approximately four months faster than a typical project of this size, according to Think Wood, an organization that promotes the use of softwood lumber.

Incredible build times pulled off with smaller-than-usual work crews have mass timber catching the eye of many in the commercial real estate world. In addition, the carbon-emissions advantage provided by both using timber and limiting the use of concrete and steel makes mass timber a compelling option for fulfilling environmental, social and governance (ESG) mandates. Despite these benefits, we still have not seen mass timber take off stateside to the degree it has elsewhere, especially across the Atlantic.

“The way Europeans think about and construct buildings is different than in the U.S.,” says Bill Parsons, vice president of operations with WoodWorks Wood Products Council, a provider of mass timber education and project support. Parsons points to Europe’s different approach to building envelope assemblies and construction preferences as reasons why mass-timber products have been much more prominent there. Large wood buildings fell out of favor in major U.S. municipalities in response to the many tragic fires that devastated cities such as Boston, Chicago and San Francisco in the late 19th and early 20th centuries. But these newer wood products have performed competently on tests of fire safety, causing some cities to rethink their trepidation toward timber.

Mass timber is differentiated from light-wood frame, stick-frame or even heavy timber post-and-beam structures because it is engineered for loads similar in strength to structural materials such as concrete and steel. While products such as glue-laminated timber are more than 100 years old, mass timber really stepped onto the European construction stage with the invention and growing use of cross-laminated timber (CLT) in the mid-1990s in Germany and Austria.

The 2015 International Building Code (IBC) was the first to recognize CLT for use in buildings up to six stories, and although those codes are used throughout much of the United States, curiosity was only piqued in a few corners of the country. That is, until recently. Newly imposed tariffs on steel (25 percent) and aluminum (10 percent) are making traditional concrete and steel buildings more expensive. According to Turner and Townsend’s International Construction Markets Survey 2019, the new tariffs alone constitute a 1 percent increase in total construction costs for buildings at the lower extreme of steel makeup and as much as 6 percent on the high end. These cost increases, coupled with a shortage of skilled labor capable of building traditional high-rises, have caused U.S. developers and investors to look elsewhere.

The product has been used somewhat in the United States already — as of March 2019, 545 multifamily, commercial or institutional projects had been constructed out of mass timber or were in design across the country, according to WoodWorks, the wood products council — but this does not even scratch the surface of the potential market. Roughly 77 percent of the square footage built each year in the United States is less than 12 stories high and could be made with mass timber. Yet, of nonresidential buildings less than 12 stories, 90 percent today are made of steel and concrete, Cees de Jager, chief marketing officer of the Softwood Lumber Board, told Seattle Business.

These numbers do not account for what is allowable by various building codes used throughout the United States — but they will not need to before long. Recently approved changes to the 2021 IBC (see “Regulatory framing” for details) will allow for mass timber and CLT to be used in mid- and high-rises as tall as 18 stories. These changes have many in U.S. real estate sharpening their axes, ready to take a swing at this new building typology.

Felling trees, falling prices

Rising material costs — especially those associated with tariffs implemented by the Trump administration — can be finicky and tough to project over the long term, or even through the development phase of a building. But not all cost savings associated with mass timber are reliant on the present struggles of its competing building materials.

“Wood builds much faster than concrete and steel — period,” says Richard Lara, president and CEO of California-based RAAM Construction. “If I were to have the opportunity to use mass timber on the projects we are currently working on, I could shave three or four months off of my schedule. That doesn’t just mean savings for me; there are huge savings for the developer, as well, because they can start using their product much faster.”

Bernhard Gafner of the structural engineering firm Fast + App estimated mass-timber projects could be completed 25 percent faster than equivalent concrete buildings, in an interview with Think Wood. But shorter build times are not the only way mass timber helps reduce the labor costs of completing a major building. The projects require 75 percent fewer workers on deck, Gafner added, and require much less specialized labor at a time when skilled workers are both hard to find and expensive.

Timber buildings are also lighter in weight than steel and concrete buildings (anecdotally, they are as much as 80 percent lighter), allowing for a reduction in the size of footings and a corresponding decrease in costs for the project. All of these factors, combined with the material cost savings that can reach as high as 15 percent, according to AXA XL, create the potential for significant cost savings on mass-timber projects throughout development, though the savings on material costs are dependent on site location and the timber source.

Yet, even though these buildings may be cheaper to construct, they must be leased and filled before they can turn a profit. Although the environmental benefits that come with using timber are usually ancillary to a fiduciary’s decision making, some in the industry see it as a bonus for the bottom line as well, as long as you are targeting the right clientele.

Wood you rather

As incredible as it may sound, the cement industry accounts for about 5 percent of global carbon dioxide emissions entirely on its own, according to a paper from Columbia University. The steel industry fares no better, accounting for an additional 5 percent of global greenhouse-gas emissions, according to an article from MIT. With astonishing figures like these, it is no surprise the designers of the Bullitt Center in Seattle — the self-described greenest commercial building in the world — opted against using a concrete frame as originally planned.

“We didn’t go into this thinking we’d do it with heavy timber at all,” Brian Court, project architect with The Miller Hull Partnership, the design firm behind the project, said in a case study of the building. “But when we considered the embodied energy and the carbon footprint of the concrete, timber was a much better environmental solution. When you consider the carbon sequestered in the timber itself, you have a carbon-positive building solution.”

Carbon absorbed into wood over the life of a tree will remain in that wood through the building’s lifecycle, and even longer if the materials are recycled after the building is dismantled. This carbon sequestration, combined with the emissions avoided by not using concrete, led to an estimated carbon benefit of 1,703 metric tons of carbon dioxide from the construction of the Bullitt Center, according to WoodWorks. In fact, using wood as a building-material substitute could save “14 to 31 percent of global CO2 emissions and 12 to 19 percent of global [fossil fuel] consumption by using 34 to 100 percent of the world’s sustainable wood growth,” according to a 2014 study titled “Carbon, Fossil Fuel, and Biodiversity Mitigation with Wood and Forests,” published in the Journal of Sustainable Forestry. This doesn’t even factor in the environmental benefit that comes with mass timber’s capability to be manufactured from relatively small-diameter trees as well as other low-value resources, such as forests affected by insects.

But concerns surrounding the forestry practices used to acquire the timber have some environmental groups uneasy. These concerns surfaced when prominent environmental groups, including the Audubon Society and the Sierra Club, sent an open letter to the city of Portland, Ore., regarding their worries about the city’s embrace of mass timber. The letter raised doubts about the positive impact of mass timber and emphasized the need for sustainable harvesting practices. It even pointed to a “perverse incentive” to shorten logging rotations and more aggressively clear-cut that was created by mass timber’s ability to be manufactured from smaller trees.

“We must ensure that mass timber drives sustainable forestry management, otherwise all of these [environmental] benefits are lost,” Mark Wishnie, director of forestry and wood products at The Nature Conservancy told the Yale School of Forestry and Environmental Studies. Though, he added, “there is enough data to say the [carbon dioxide] savings are significant.”

Because of the many factors included in any rigorous analysis of environmental impact — forestry practices, lifecycle of the timber product, shipping practices, etc. — the case for mass timber as an ecological benefit remains complicated. But sustainability initiatives are not the only positive developers see in using more “natural” building materials.

Buildings that use significant amounts of wood product in their lived environment have been shown to have positive biophilic effects on the well-being of their inhabitants. “It’s one of the reasons a lot of mass-timber buildings are offices,” says Parsons, with WoodWorks. “Developers want to create buildings that companies will lease at a premium, and companies are willing to pay a premium for inspirational work environments.”

It is true some people are willing to pay more for a particular natural aesthetic, whether in their office space or apartment. Beyond studies connecting the biophilic aspects of these buildings to tenant well-being, it can be appealing to lease space in a building that has a positive social or ecological impact. Anecdotally, this appeal is strongest among younger professionals and the businesses that employ them.

“I would rather deliver a product that looks and feels very different, with social and environmental characteristics that speak to people, than be fighting for occupancy based on cost and who has the better screening room or golf simulator,” explains Dillon Lorda, managing member and founder of Conrad Investment Management. Lorda says the problem with competing against your neighbors in the amenities arms race is a newer amenity package will inevitably be offered next door once new supply comes on board.

Creating a unique aesthetic or building typology is generally a more reliable differentiator over the life of a building than installing the latest trendy amenities. But it also relies on that aesthetic remaining unique within its locale and remaining appealing to the people who live or work there. This requires a more intimate understanding of local markets and the clientele that a leasing agent is intending to pursue, but it can translate to long-term occupancy stability if done right.

“We don’t need to deliver product for the entire market,” says Noel Johnson, managing director at Conrad Investment Management. “We want to deliver a really high-quality product to a subset of the market that appreciates and values it disproportionately.”

Firms, such as Conrad Investment, that are currently working on mass-timber projects feel strongly about mass timber’s ability to set a building apart in a crowded market. But realizing these benefits requires more than simply checking a box that says “mass timber” on an investment mandate.

The forest, the trees

As when working with any new material, to realize the full benefits of using mass timber, you need a particular skill set and knowledge base. There needs to be a comfort level with the product from the investors, the architects, the developers. Even the leasing agent needs to be able to market a building on a differentiated narrative built upon environmental impact, biophilic advantages and natural aesthetics. There also needs to be a certain appetite for the challenges that come with being a trailblazer.

“You need to have a developer who thinks that the return benefits are worth the risks of being a first mover,” explains Lorda.

In addition to finding minds that understand the advantages of mass timber and how to deliver them, you also need ready access to the materials and reasonable proximity to the factory in which they are being prefabricated. Both of these should become more prevalent as U.S. commercial real estate continues to embrace mass timber and as building codes continue to expand its allowable use.

Katerra, a technology firm focused on construction, is one of the many companies trying to make the mass-timber vision a reality. In February, Katerra announced development of its first fully optimized CLT commercial office building platform, which is intended to create a coordinated kit of mass-timber building components that includes the building structure, core and skin. The company is offering components for buildings up to 12 stories, consistent with Type IV-B of the 2021 IBC currently in use in Oregon and Washington state.

If the market embraces it, the potential applications are extensive. Once the 2021 IBC is adopted nationwide, an additional 200 million square feet of construction annually could use wood by code, according to estimates based on analysis by Dodge Data & Analytics and WoodWorks.

Whether it is used to this degree, it is almost certain we will see an increase in the prevalence of mass-timber buildings in the United States over the next handful of years. As these giant Erector Sets pop up all over the United States and cranes carefully place mass-timber puzzle pieces into place, we might see CBDs turn into a veritable forest — and see that forest for the trees that created it.

Reg Clodfelter is a freelance writer in Berkeley, Calif.

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