In today’s construction news, read about analysts of the construction industry are frequently questioned about the proportion of public and private sector spending on construction. Answering that question is simple thanks to the Census Bureau’s monthly report. On the other hand, as it seeks to create a method to combat the growing expense of building while providing moderately priced rents, the largest apartment owner in the United States is scheduled to debut its first multifamily project constructed with modular structural elements finished at its Pennsylvania-based factory.
Funding for Construction in the United States Comes From
Original Source: Where are the U.S. construction spending dollars coming from?
Analysts in the construction industry are routinely questioned how private and public expenditures are used. The Census Bureau’s monthly report gives an obvious answer.
The Census Bureau’s August put-in-place construction spending report shows a 7.6% increase in dollar volume compared to the first eight months (or two-thirds) of last year, with residential spending up 7.2% and nonresidential spending up 8.0%.
The put-in-place figures show project costs from start to finish. Similar to work-in-process payments. They spread out the money, unlike ‘starts’ data, which place a project’s whole worth in the month of its groundbreaking.
Through August, the private sector contributed 78% of construction dollars, while the governmental sector contributed 22%.
Nearly all residential building spending was private (98.8%).
The private sector made up 61% of nonresidential building and the public 39%.
Next, we’ll examine the subcategories of nonresidential construction activity where this subject becomes most interesting.
Private Dollars Predominate in Manufacturing: Most manufacturing construction funding (99.6%) is private. August industrial work dollar volume up 24.2% year-to-date.
Lodging: The private sector controls 97.2% of travel accommodation construction spending through August. The YTD dollar volume change in this subcategory was -5.7%.
Commercial (retail, warehouses, restaurants): Private finance dominates this subcategory, 96.1%. The dollar volume change for this job through August was -11.5%.
Office: Private sector office building funding is 84.0% compared to 16.0% for the public sector. YTD dollar volume is up 1.6%.
Power (including oil and gas pipelines and storage facilities): The August YYD power construction division was 85.8% private and 14.2% public. The YTD dollar volume change was +12.6%, with private at +10.0% and public at +30.9%.
Health Care: In August YTD, 80.1% of health care was private and 19.9% public. Private dollar volume increased 6.6% YTD, while public volume increased 3.9%.
Public Dollars Predominate in Highway and Street Construction: 99.3% of the Census Bureau’s August YTD PIP number for ‘road’ construction was public financing. YTD dollar volume is +7.3%.
Public Safety is again 98.7% government-backed. Its August YTD dollar volume rose 36.7%.
Waste Disposal and Water Supply: The public sector pays 96.3% and 96.0% for these two subcategories. Sewage/waste disposal dollar volume increased 10.0% YTD in August, while water supply increased 16.1%.
Educational: Unlike health care, school construction investment is 19.5% private and 80.5% public (or one-fifth to four-fifths). Dollar volume has increased 9.1% YTD, with private at 10.5% and public at 8.8%.
Transportation (air, land, water, and passenger terminals): The public sector spends 68.6% YTD in August, but the private sector spends 31.4%. YTD dollar volume change is +3.2%, with public and private funds matching growth.
Where Rough Balance
Stadiums, concert halls, studios: Through August, private sector spending for ‘amusement and recreation’ projects were 46.8%, close to the public sector’s 53.2%. The private sector lost 2.0% of the YTD dollar volume change, while the public sector gained 24.9%.
Religious (all private), communication (almost all private), and conservation and development (nearly all public) dollar-volume subcategories have been kept out of the comments.
Total construction has five main components: residential, commercial, institutional, industrial, and engineering. Commercial, institutional, and industrial will be integrated into nonresidential buildings after further condensing.
Nearly all residential, commercial, and industrial developments are funded privately. A major effect is that interest rates determine whether such effort will occur. Additionally, office vacancy and capacity utilization rates must be considered.
The public sector accounts between 60% to 40% of institutional and engineering construction spending. Their main drivers are demographic changes (population growth and changing age structure) and government funding.
Greystar Gets Ready to Launch First Modular US Residential Project
Original Source: Greystar nears debut of its first modular US apartment project
Pennsylvania development promises 40% faster construction. The largest U.S. apartment owner will debut its first multifamily complex built with modular structural elements from its Pennsylvania factory to combat growing development costs and offer moderate rentals.
Greystar Ltd. Findlay in Coraopolis, Pennsylvania, has 312 apartments in six buildings. One-, two-, and three-bedroom apartments range from 662 to 1,373 square feet. Company anticipates Ltd. Findlay to open Dec. 2.
The project, which looks like a garden-style development inside and out, is the first from Greystar’s Modern Living Solutions, a modular construction factory 90 miles north of Ltd. Findlay that promises to change Greystar’s US development strategy.
The Modular Building Institute, a trade body for factory-based building, reported $12 billion in modular construction spending in 2022. The association reported it accounted for over 6% of construction starts, treble the 2015 amount. Almost a third of those projects were multifamily complexes, up from 24% in 2021 and the largest property category.
The Modular Building Institute lists Greystar as the largest of three US enterprises vertically integrated as developers and modular manufacturing owners. The others are Georgia’s Impact Housing and Michigan’s Ginosko Modular.
“We’re at the forefront of doing something differently,” Modern Living Solutions managing director of development Andy Mest said in an interview. We “realize the opportunity of how we can not only scale our business to another level, but also change the way we deliver housing.”
European influence
Mest started Modern Living Solutions after working for Greystar in the UK.
In his three years in London overseeing global construction, Mest saw Greystar’s success with modular building, which is more common in Europe, especially in Nordic countries with prolonged inclement weather that makes outdoor construction difficult. Modular projects preassemble significant elements of a structure in a factory, unlike on-site construction. Prefabricated components are brought to the construction site and installed quickly.
Mest returned to the US in 2018 and recognized an opportunity to use modular construction to address multifamily industry underlying concerns.
After returning from abroad, he claimed, “We had further kind of slipped into the hole of productivity,” describing the U.S. market. Labor constraints, supply chain challenges, and complexity allowed us to start thinking about, ‘How do we deliver our projects moving forward?’”
Mest found that modular apartments reduced insurance rates by 25%, were 40% faster to build, and quadrupled industrial productivity during an eight-hour day.
Cost control
The US had residential modular construction before 2018. It created unique single-family homes and government-subsidized affordable housing for low-income renters. Through cost-effective workforce housing development, Mest aims to provide housing at scale and a price that benefits middle-income residents.
Mest created Modern Living Solutions as a vertically integrated Greystar firm to control costs using Greystar’s scale and experience. Many third-party factories request a 25% deposit and another 25% payment before manufacturing begins, early capital outlays that reduce a project’s prospective earnings.
It cuts labor expenses and building time. Modern Living Solutions personnel perform repetitive activities at workstations, inspired by assembly line manufacturing.
“They don’t ever have to run to Home Depot for a new drill,” Mest added. “They don’t have to pick up delivered material and carry it up one, two, or three floors to get to work; everything is there in front of them.”
Eliminating these extra duties saves Mest time, tripling factory production over the job site.
A faster and uniform inspection procedure allows frame and trades like plumbing, roofing, drywall, and heating to be done simultaneously. Interior work not done in the factory can be done on-site while exterior finishes are done.
Construction is faster due to worker efficiency. Traditional construction would take 24 months for Ltd. Findlay. Using the Modern Living Solutions factory model, it was completed in 14 months, 40% faster.
“From start to finish on one of the buildings we’re doing out there today, to go from rough into the same stage we’re at is probably a seven-month window,” Mest said. “We’re doing that in 3-4 weeks.”
The modular construction approach favors light-gauge steel over wood. Insurance premium reductions of up to 25% offset comparable material costs, according to Mest.
Pipeline expansion
Greystar’s Knox factory, which employs over 350 people, is the company’s only modular production facility in the US. Although the corporation is exploring other locations, it’s moving forward with Northeast and mid-Atlantic projects that will start on the Knox manufacturing floor.
Mest reported that Greystar has 15 modular transactions in progress, including six under contract.
Since 1993, Greystar has developed and managed rental housing, logistics, and life sciences properties, becoming the largest apartment owner and operator in the US, according to the National Multifamily Housing Association.
By the association’s 2024 rankings, the Charleston, South Carolina-based corporation has more than 108,500 U.S. apartments, a 10,000-unit increase from the year before, with more than 9,100 units in development.
Summary of today’s construction news
In simple terms, the private sector contributed 78% of the total construction funds spent through August of this year, while the public sector contributed 22% (about three-quarters to one-quarter). Nearly all of the funding for residential construction—98.8%—came from the private sector. In nonresidential construction, 39% (i.e., three-fifths as opposed to two-fifths) came from the public sector and 61% from the private sector.
On the other hand, according to Mest, Greystar has six modular deals under contract and around 15 modular deals in total at various phases of its pipeline. According to the National Multifamily Housing Association, Greystar, which was founded in 1993 and has concentrated on development and property management in rental housing, logistics, and life sciences, has become the largest apartment owner and operator in the US.
