GOAL: Build 300,000 new homes by 2030 across all types, prices, and - - PowerPoint PPT Presentation

Minnesota Task Force on Housing

REC: Position Minnesota as a national leader in the advancement of housing innovation and technology GOAL: Build 300,000 new homes by 2030 across all types, prices, and locations to stabilize prices and meet demand

Minnesota is still working to overcome the housing shortage driven by the recession

Housing permits in Minnesota Annual, single and multi-family private units 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 1988 2016 1992 2008 1996 2000 2012 2004 Multi-family units Single-family 2018

50k+ shortage

Rental markets construction is particularly uneven Rental production vs. needed distribution by household income

We have even larger production gaps for low- and moderate- income homes

100 300 1,400 7,000 2,500 2,000 1,950 2,350 $25,001-$49,999 $50,00-$72,000 <$25,000 >$72,000

• 1,700
• 2,400
• 550

4,650 Needed distribution Current annual production Deficit of units based on need Excess of units based on need

SOURCE: Minnesota Housing analysis (data from HUD, Minnesota State Demographer’s Office, Met Council)

Shortage of housing + shortage of labor = Opportunity for modular

Modular construction offers a potential solution for some of the industry’s problems Key market forces shifting value toward modular construction

▪ Dire shortage of affordable

housing

▪ High cost of construction labor –

driven by shortage of labor: structural change

▪ Continued low productivity of

construction industry

▪ Low baseline for modular in the

U.S. <5% of construction market

1

Labor cost savings 20 - 40% possible

2

Schedule improvement 20 – 50%

3 4 5 Ability to build in resilience and adapt to new

building codes Improved end product quality due to tighter tolerances and fewer errors Long term sustainability and lower life-cycle costs due to higher energy efficiency, more efficient material usage

SOURCE: McKinsey & Company, Thomas Insights

What do we mean by modular construction?

3D Volumetric Flatpack Increasing scale Increasing complexity Transitional single unit Pre-finished panel Pre-finished room Pre-finished house Fully serviced and finished walls Fully serviced and finished room Fully serviced and finished house Fully serviced and finished single unit Frames: Pre-cast concrete, steel, wood Fully functional with complex fixtures Limited fixtures in one

• r more

materials Largely structural (single material) Single discipline, individual units Panels Volumetric units Complete structures

SOURCE: McKinsey & Company: Interviews, case studies, literature review

Regional gap in this marketplace means we can address a critical need and enable an export opportunity

BIRMINGHAM, AL (Zekelman Industries) BROOKLYN, NY SAN FRANCISCO, CA LATHROP, CA SEATTLE, WA AUSTIN, TX (Zekelman Industries) BOISE, ID POTTSTOWN, PA BERWICK, PA

500 mile max. shipping radius

Four emerging recommendations from the Construction Revolution Summit

1 2 3 4

Develop and promote learning opportunities which showcase Minnesota’s building standards and inspections process for off-site construction. Launch multi-sector learning cohorts to explore the potential and challenges of offsite construction techniques. Incentivize a series of pilot projects for off-site construction through a public-sector led RFP. Foster local collaboration to develop a fast-track or pre-approval process for modular concepts in order to reduce uncertainty in local permitting and accelerate speed-to-house.