How Labor and Demand Drive the Growth of Off-Site Construction

With all of its impressive benefits like cost-savings, accelerated project schedules and higher quality builds, the off-site construction industry is rapidly gaining momentum with no signs of stopping. According to a survey conducted by McGraw Hill of companies who had tried off-site construction solutions:

• 84% reported higher quality projects since transitioning from traditional methods.
• 80% saw greater customer satisfaction.
• 77% experienced greater productivity.
• 77% improved job site safety.

More than ever, off-site and prefabricated construction is primed to take over the market, and the historical reluctance to adopt the manufactured model is vanishing rapidly. The market demand is such that developers can’t afford to ignore off-site solutions. So why do some companies still drag their feet?

In part, it may be a lack of understanding of the market demand for housing. Research conducted by the McKinsey Global Institute, for example, found that California needs to build 3.5 million units by 2025 to close its housing gap. Demand is clearly more than sufficient in many markets to maintain manufacturing facilities, especially given that many existing facilities are already running at capacity with long lead times. In addition, the off-site model offers faster project completion times, so this high demand can be met more quickly.

There are a couple of factors in particular that help fuel the continued rise of prefabricated and off-site solutions. Let’s break down the labor dynamics and look more deeply into the demand.

The Impact of Labor Dynamics

Labor dynamics play a huge role in determining the success of off-site construction in a given market, particularly when it comes to labor shortage. A limited supply of skilled labor drives up wages and costs, often setting the stage for off-site construction solutions. 

According to the 2018 Off-Site Construction Industry Survey, skilled labor shortages continued to make off-site construction attractive to developers. “With the ongoing shortage of skilled craft workers (which exceeded two million in 2017), prefabrication in a controlled, off-site environment may become a necessity for many U.S. contractors attempting to remain competitive with a lower-skilled workforce,” the survey states.

Off-site construction significantly reduces the need for skilled labor and therefore continues to attract developers’ attention in countries like the United States, Japan and the United Kingdom. Off-site construction’s ability to reduce the need for skilled labor will only serve to further its acceptance in the market. 

Additionally, off-site construction appeals to a new generation of the workforce who do not wish to move from one construction site to another in the same way that traditional onsite construction demands.  

The Impact of Demand

As we’ve discussed, the evolving demands of the industry have done their part to pave the way for off-site construction. According to a recent survey conducted by FMI, contractors using prefabricated construction on more than 50% of their projects are more effective than those making less use of prefab building techniques. The survey goes on to say that nearly 40% of U.S. contractors said that prefab and modular construction are part of their future strategic construction initiatives.

The reason that off-site construction is growing in demand can be traced to its key benefits, including:

• Lower Cost
• Accelerated Build Schedules
• Better Quality
• Improved Safety

For some areas, the necessity for off-site solutions goes even deeper. Consider places where localized hazards like geography, terrain and weather patterns can disrupt traditional onsite builds. A project can be completed much faster off-site in a controlled, factory environment, which is why areas with localized impediments tend to gravitate to off-site construction.

Off-site construction also offers improved quality and safety standards compared to traditional builds. Highly standardized factory processes, improved safety and comparative sustainability of off-site builds are all elements that make off-site construction such a winning method for today’s market.

Off-Site Construction in Florida

Off-site construction’s presence can certainly be felt on a global scale, especially in markets like Japan and Scandinavia. But the impact can also be felt closer to home. Florida is seeing an increase in off-site construction, due to several factors including:

• Affordability. The off-site model cuts costs in various ways, including reducing the number of contractors, preventing long project delays and reduced cleanup time. Because Florida is experiencing a boom in construction, the affordability and shorter project schedules make off-site construction a desirable alternative to traditional onsite construction.
• The Rise in Condo and Multi-Family Housing. Retirees seeking condos and townhomes in Florida is nothing new. But these days, millennials are also moving to Florida in droves, with three Florida cities claiming top ten fastest-growing millennial populations.  Additionally, young professionals trend toward renting instead of owning. So combined with the retired boomers seeking similar housing, Florida’s entering a boom in multi-family housing. Off-site construction’s ability to deliver projects on faster schedules, combined with improved quality and more sustainable practices makes it a practical and attractive choice for developers.
• Climate. Florida endures extreme weather, including tropical heat, high humidity, and unpredictable rainfall. and, most notably, hurricanes. Off-site methods yield higher quality, improved safety standards, and allows homes to be dried in more quickly, avoiding exposure to the elements and reducing the likelihood of mold.
  Additionally, the controlled factory environment takes workers out of the grueling summer heat.

Make the Leap to Off-Site Construction with ICG

Whether you’re looking to make the leap to off-site construction for the first time, or you’re well-versed in the advantages of the off-site model, ICG is here for you. ICG has the capacity to service production builders and developers with complete labor and materials packages including complete supervision services. Our mission is simple: ICG will capture cost savings and deliver unparalleled value to every customer. If you’re interested in discussing a new construction project, contact ICG to see how you can save time and cut costs for your project.