Minnesota Task Force on Housing GOAL: Build 300,000 new homes by 2030 across all types, prices, and locations to stabilize prices and meet demand REC: Position Minnesota as a national leader in the advancement of housing innovation and technology
Minnesota is still working to overcome the housing shortage driven by the recession Housing permits in Minnesota Annual, single and multi-family private units 45,000 Multi-family units Single-family 40,000 35,000 30,000 25,000 50k+ shortage 20,000 15,000 10,000 5,000 0 1988 1992 1996 2000 2004 2008 2012 2016 2018
We have even larger production gaps for low- and moderate- income homes Rental markets construction is particularly uneven Rental production vs. needed distribution by household income 7,000 Excess of units based on need Current annual production Deficit of units based on need Needed distribution 4,650 2,500 2,350 -550 2,000 1,950 -2,400 1,400 -1,700 300 100 <$25,000 $25,001-$49,999 $50,00-$72,000 >$72,000 SOURCE: Minnesota Housing analysis (data from HUD, Minnesota State Demographer’s Office, Met Council)
Shortage of housing + shortage of labor = Opportunity for modular Key market forces shifting value Modular construction offers a potential solution for toward modular construction some of the industry’s problems ▪ Dire shortage of affordable 1 Schedule improvement 20 – 50% housing Labor cost savings 20 - 40% possible 2 ▪ High cost of construction labor – Improved end product quality due to tighter driven by shortage of labor: 3 structural change tolerances and fewer errors ▪ Continued low productivity of Long term sustainability and lower life-cycle 4 construction industry costs due to higher energy efficiency, more efficient material usage ▪ Low baseline for modular in the U.S. <5% of construction market 5 Ability to build in resilience and adapt to new building codes SOURCE: McKinsey & Company, Thomas Insights
What do we mean by modular construction? Increasing Flatpack 3D Volumetric complexity Fully Fully Fully Fully Fully serviced and serviced and serviced and serviced and functional with finished finished finished finished complex single unit walls room house fixtures Limited Transitional Pre-finished Pre-finished Pre-finished fixtures in one single unit panel room house or more materials Frames: Pre-cast concrete, steel, wood Largely structural (single material) Increasing scale Single discipline, Panels Volumetric units Complete individual units 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 SEATTLE, WA BROOKLYN, NY BOISE, ID BERWICK, PA LATHROP, CA POTTSTOWN, PA SAN FRANCISCO, CA BIRMINGHAM, AL AUSTIN, TX (Zekelman (Zekelman Industries) Industries) 500 mile max. shipping radius
Four emerging recommendations from the Construction Revolution Summit 1 Develop and promote learning opportunities which showcase Minnesota’s building standards and inspections process for off-site construction. 2 Launch multi-sector learning cohorts to explore the potential and challenges of offsite construction techniques. Foster local collaboration to develop a fast-track or pre-approval process for 3 modular concepts in order to reduce uncertainty in local permitting and accelerate speed-to-house. 4 Incentivize a series of pilot projects for off-site construction through a public-sector led RFP.
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