Construction industry investment banker Margaret Whelan has picked up a “this time’s different” vibe for innovation investment. She firmly believes that old ways won’t open new doors. Her eponymous advisory firm’s clientele operates at a bustling crossroads of Wall Street institutional investors, venture capitalists, Silicon Valley insurgents, friends-and-family finance, old school home building operators, and a disrupt-able supply chain of building materials enterprises. Her view is of a juncture when fortitude and further investment is not only needed, but gaining traction on some of housing’s wicked problems—such as labor shortages, lagging productivity, and surging costs. Whelan’s spidey sense is that, while under normal circumstances innovation might get put on an untimely hold, home building enterprises may have reached a no-going-back inflection point. Why?
“The investments being made are meaningful,” per Whelan, noting that $3 of every $5 dollars of upwards of $10 billion in capital raises in real estate tech and development over the past 12 months have been Series A funding for entrepreneurial, out-of-the-box startups, with participation by an increasingly wide range of investors. Further, Whelan says, supply chain behemoths with broad geographical infrastructure, like publicly traded LP Building Solutions and BMC, have re-tooled, restructured, and invested in cutting complexity out of home construction’s baroque workflows and inefficient value chains.
“The national builders are run by seasoned management teams who are starting to embrace the opportunity that technology provides, and that consumers are expecting,” says Whelan. She argues that up-and-coming household decision-makers do and will value precisely-crafted, energy-positive, waste-reducing new homes produced largely in factories, rather than by 25-plus separate trade crews on home sites. “I believe that these young, affluent, educated millennials care about their carbon footprint and they don't want to see so much waste. They appreciate the precision that 3D designed and factory-built houses offer, along with the faster delivery times and lower utility bills. Being customer focused gives you pricing power, so it is encouraging to see some of the publicly traded builders with permanent capital make direct investments in new world providers, or indirect investments in housing related venture capital funds; and it’s important that their boards give them time and support to make this happen.”
A Texas startup says it will be able to use a 3-D printer to churn out a concrete house within days by year-end, a technology that has the potential to help solve housing shortages but faces regulatory and technical hurdles…
The homes Icon and others have produced with 3-D printers so far aren’t what most people are accustomed to. “Some of the pieces I saw would be magnificent at a MoMA but I couldn’t imagine living in them,” said Margaret Whelan, founder and chief executive of Whelan Advisory, which advises the home building industry.
…If all goes according to plan, the three-story building designed and built by Silicon Valley startup Katerra Inc. will rise from its concrete floor to completion in 90 days. The rapid pace is possible because custom panels of walls and cabinets are built by an Arizona assembly line and stitched together on-site.
By attempting to rethink so much at once—Katerra is making its own lights in China and manufacturing its own windows and cabinets—the company risks spreading itself too thin, said Margaret Whelan, founder and chief executive of Whelan Advisory, which advises the home building industry. “What I’ve observed is that those companies that are really narrow in their focus are more successful than companies that are all over the place,” she said.
A new generation of prefabricated housing that bears little resemblance to the modular homes of old is among several technologies homebuilders are embracing to cope with the worker shortage. They’re also starting to deploy bricklaying robots and software programs that allow them to avoid miscommunication and delays.
“We’re at a tipping point where it’s finally just gotten too expensive to build the old-fashioned way,” says Margaret Whelan, CEO of Whelan Advisory and an investment banker for the home building industry.
...Go to manufacturing environments today, and women on the shop floor and in production management are not rare.
I was on a panel recently at ULI with Margaret Whelan of Whelan Advisory. She noted that Buddy Raney of RCI Construction in Orlando, Fla., employs more women than she’s ever seen on a factory floor, as they deliver their Vertically Integrated Total Solution (VITS) to the national builders in their markets. Raney estimates that VITS reduces the typical framing cycle by 10 days; allowing for their builder customers to close 10% more homes as a result.
George Casey, principal at Stockbridge Associates, Gerard McCaughey, founder and CEO of fully-integrated offsite solution platform Entekra, and capital advisor Margaret Whelan, founder and principal of Whelan Advisory LLC, joined me for an hour to focus on this topic...
Some guess that 2018 and 2019 are going to be pivotal years for the emergence of integrated factory fabrication of major portions of houses prior to assembly on home sites. Many counter that it's still too soon, and that all the focus on Katerra, Clayton, Entekra, Blueprint Robotics, Unity Homes, Buddy Raney Construction, Blokable, Kasita, Blu Homes, and other players in the modular, compontent, panelization, offsite construction models is mostly hype that gets amped up because of current labor capacity anxieties.
I enjoyed moderating a panel at the 31st Housing Leadership Summit this week:
"It's rare that big news breaks during a panel conversation in a conference, but just such an event occurred this past week during our session, "The Rising Power of non-U.S. Owners," led by Margaret Whelan, founder and CEO of Whelan Advisory, LLC. "