Prefab-tech suits commercial
Labour constraints, rising material costs and demanding compliance procedures in commercial and industrial property construction, are pushing some developers toward modular construction.
Bayleys national director for commercial and industrial property, Ryan Johnson, says pressure to deliver projects on time and to budget is driving the interest.
“New Zealand’s construction sector skills shortage has been compounded by ever-rising costs of materials — from foundation concrete and steel beams, through to window framing and trusses, so the endpricing per sq m is just rising every quarter,” Johnson says.
“Much is made of modular technology as a means to help meet the Government’s KiwiBuild promises, but there is equal potential for it in commercial and industrial construction. The industry, particularly within the Golden Triangle of Auckland/Hamilton/Tauranga, could see this building format working most effectively in single-level strip retailing sites, in mixed-use high-street style locations where traffic disruption has to be kept to a minimum during the construction phase, and for low-rise suburban commercial towers of up to about 17-or-18 m in height. In essence, modular builds are the next evolution of the tilt-slab building format, so prevalent over the past decade or so.”
Data analysis from Bayleys indicates that over the past two calendar years, construction costs on large commercial projects have risen between six-to-eight per cent annually — cutting into developers’ margins. Those increases of the past two years looked to have peaked. The latest Construction Market Intelligence industry review report from building data firm Rider Levett Bucknall forecasts that construction cost increases in 2019 will be in the region of 3.5 percent.
Meanwhile, Rider Levett Bucknall’s Auckland director, Geoff Speck, is not optimistic regarding skills shortages in the sector.
“Securing appropriate contractors and subcontractors to deliver projects in excess of $100m in Auckland, continues to be difficult and project timelines are likely to be compromised,” he warns. The Government’s intention to reduce net migration means that — unless conditions change — access to the skilled construction workers will be constrained for over next five to 10 years, accelerating the push towards importing prefabricated structures. Earlier this year, New Zealand’s first modularbuilt hotel rose some five stories above the ground in Christchurch. The 88-room, 3555sq m Cosa Hotel — on a 1300sq m site Cnr Colombo and Salisbury Streets — was built in a Vietnamese factory.
Long-time hotel owners Gary and Ann LePine’s Lepton Holdings had owned the Cosa site before the Canterbury earthquakes struck sevenyears ago. They looked for a prefab manufacturing contractor in Asia, because they couldn’t make a traditionally-built hotel stack up financially. The hotel was shipped in to Christchurch in 17m-long doubleroom and corridor modules. Shipping took 18 days and comprised about 7 per cent of the building’s cost. The finished room modules included all fixtures, fittings and furniture — right down to bathrooms, wiring and painting. Cosa’s $12.5m build cost was between 10 to 20 per cent cheaper than a traditional NZ commercial build, with raw materials costing anywhere between 30 and 70 per cent cheaper than NZ alternatives.
Cosa hotel builder TLC now has two further 200-room hotels to build in its Vietnamese factory for sites in Queenstown. Johnson says some traditional building costs, such as the use of pre-cast concrete framing, could be reduced fairly quickly by adopting modular practices.
He says aside from cost savings, benefits of modular building include the ability to carry out site-works preparation — plus construction of the lift-core — at the same time as the building is being prefabricated in an offshore factory.
New Zealand now has 26 prefabrication companies — most focusing on small-scale residential builds, and working with wooden framing.
Johnson thinks this could change rapidly as the commercial and industrial sectors push for concrete and steel modular structures.
“Looking forward, the onus will be on suppliers of these structures to deliver prefabricated modules with a degree of design flair. Architects and designers may increase their understanding of the modular-build process. They’ll get to know what limitations modular pre-fabrication builders have in terms of deliery outside the rectangular norm.”