Is volumetric the future for housing development?

15.06.23

Find out more about the Greenford Quay development here

Experts share their views on the place of modular construction in tomorrow’s real estate industry.

At a once-derelict, 27-acre site next to the Grand Union Canal in Greenford, west London, developer Tide Construction is craning hundreds of precision-engineered build-to-rent homes into place.

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Since works at Greystar and Ivanhoé Cambridge’s Greenford Quay development began in 2018, some 630 homes have already been completed by Tide and Vision with an additional 750 currently onsite. When the project finishes, it will offer around 2.4m sq ft of homes and a further 190,000 sq ft of commercial space.

The ability to deliver housing at such speed is just one of the many ways in which volumetric construction – also known as “modular” – can play a part in addressing the housing crisis, according to the experts behind the development. The challenge lies in improving the understanding of such modern methods of construction, at wider investor and government level.

Greenford Quay

Panellists set out their views during a 90-minute discussion held at Greenford Quay, hours before L&G outlined plans to halt production at its modular factory in Selby, and days after modular housebuilder TopHat gained £70m of investment from Aviva and Persimmon for expansion.

HTA Design managing partner Simon Bayliss said if Greenford Quay was used as a template for modern, sustainable urban development, it could be a game-changer for the built environment. In his view, the UK would have “no problem” meeting the government’s long-held target to deliver 300,000 homes every year. “We would improve the quality and the pace of delivering the property, and bring down the cost of doing it,” said Bayliss. “If you deliver at this scale this quickly, with this high quality, we wouldn’t have a housing crisis.”

Tide chief executive Christy Hayes said the industry is looking to the government to make planning and its associated timescales more predictable.

The problem, according to Kevin McHugh, senior director for construction at Greystar, is that most people still “have shipping containers in their head” when it comes to envisaging what the volumetric model looks like.

However, the feedback McHugh has received from visitors to the jv’s developments in Greenford and Croydon is that their factory-made homes are indistinguishable from traditional types. “It’s a construction methodology – it doesn’t have to mean the architecture looks different or that the living experience is different,” he said.

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Find out more about the Greenford Quay development here

Read the Estates Gazette article here

Regulations

There is a misconception that volumetric developments abide by a different set of rules from traditional projects, said panellists. Additionally, there is not enough recognition that volumetric construction is safer because it can be tested in consistent conditions.

McHugh said many of the questions the team receive about volumetric building are around misunderstandings relating to fire safety,. “It is this assumption that somehow modular is built to a different set of regulations compared with everything else – is false,” he said.

“The beauty of Tide and Vision Modular’s system is that it’s a steel frame, concrete slab module, but the point of construction is changed to a warehouse rather than on-site.” Hayes added: “We continuously engage with key government and industry stakeholders, taking a holistic approach to each building and demonstrating best practice guidance for our construction methodology”.

Hayes added: “We take a holistic review of all our buildings, we are working with a number of stakeholders with a view of writing new standards for this method of construction.”

Ivy Acorda, partner at law firm Trowers & Hamlins, highlighted that the legalities enabling volumetric construction are similar to those of traditional builds. The only main difference, she said, is the aim to de-risk projects at an earlier stage, given that details such as costs and design need to be agreed earlier than on traditional projects. However, she notes that this has encouraged more collaborative working arrangements and led to fewer disputes.

Acorda added that the government needs to step up to help the construction industry catch up with the pace of change. “The unknown always discourages people, and construction is quite slow to modernise itself,” she said. “Even in legislation, you can see that there is slow movement. It took forever for the Construction Act to be adopted within the industry. But if it is driven by the government, it would actually move forward.”

Tide Construction chief executive Christy Hayes said the industry is looking to the government to make planning, and its associated timescales, more predictable.

For Bayliss, the answer is for the government to help drive the requirement for the public sector, ensure the regulatory environment permits it and work with a limited number of manufacturers to ensure that projects can be delivered. “That would need to be facilitated through the planning system,” he said. “Cost effectiveness would be driven by a degree of standardisation and repetition, just as it is in car manufacturing and everything else. Hit the standard, and [you can] deliver quality more quickly, more efficiently.”

Hitting net zero targets

Against a tough market backdrop of high inflation and rising construction costs, one of the main advantages of volumetric construction is its predictability. Having direct control over the supply chain helps the jv set expectations in terms of costs.

Volumetric building also has much to offer in terms of ESG and financial viability. Nick Hillard, ESG lead at Vision, pointed to evidence from academics at Heriot-Watt University, showing that one of Greenford Quay’s blocks of flats has 44% less embodied carbon than traditional types.

Hillard said the ability to test or tweak designs off-site, in factory-controlled environments, speeds up the development process and results in reduced disruption to local communities. Additionally, offsite technology means fewer people and vehicles are required , with an 80% reduction in logistics required on site. Moreover, the factory runs on low carbon energy.

Volumetric construction also has a big part to play in the circular economy agenda and minimising waste, added Hillard, both on site and in factories. “We are hitting 99% recycling,” said Hillard, who highlighted the ability to better track waste systems than on conventional construction sites.

In terms of net zero ambitions, Hayes underlined that volumetric construction is five years ahead of the industry. He added that embodied carbon values in volumetric construction are lower than current targets set by RIBA and LETI for 2025, with some even achieving 2030. As such, Tide has gained “greater clarity” on sustainability targets as far ahead as 2050.

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Speedy investment returns

By manufacturing homes in a factory, Hayes said the quicker process results in quicker returns on investment and increased IRR for Greystar and Ivanhoé Cambridge, since it cuts construction time by 50%. “The return on capital is greatly enhanced,” he said.

“If you took construction costs as a line item, as a premium, the speed of delivery is what makes a difference,” added McHugh. “We get rental income much more quickly. It’s that balance between construction cost versus speed and delivery, and that’s why we have been able to make Greenford work.”

McHugh said that as houses and flats become less affordable to the younger generation, good-quality, purpose-built BTR homes such as Greenford Quay have become paramount.

“Our research suggests that, eventually, renting becomes bigger than home ownership because of that affordability balance,” he said. While noting that is still “some way off”, McHugh pointed out that the two completed blocks at Greenford Quay are around 95% occupied, within a “short space of them being delivered”.

“The need is there,” he said. “We are making it happen as quickly as we can to deliver that aid.”

With 3,500 homes on site and a robust pipeline of projects, Tide and Vision are certainly demonstrating how volumetric can be the future of housing, Greenford Quay is a great example of that. Cost certainty is also an advantage, and a project is de-risked because 80% of it has been manufactured in a factory, avoiding curveballs such as adverse weather conditions.

“If you took construction costs as a line item, as a premium, the speed of delivery is what makes a difference,” added McHugh. “We get rental income much more quickly. It’s that balance between construction cost versus speed and delivery, and that’s why we have been able to make Greenford work.

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