The construction industry continues to tackle the challenges of rising construction materials costs, a skilled labor shortage and overall lack of productivity improvements, offering an expansive opportunity for disruption. According to the newly released JLL research report, “The State of Construction Technology,” Silicon Valley investors are stepping in to seize that opportunity. Venture capital funds are funneling unprecedented levels of cash into Construction Technology startups’ pockets.
In the first half of 2018, venture capital firms invested $1.05 billion in global construction tech startups, setting a record high. The 2018 investment volume is already up nearly 30 percent over the 2017 total, with six months still remaining in the year. To date, the Construction Technology sector has found three Unicorns—startups valued at more than $1 billion—in Katerra, Procore and Uptake.
“The construction sector is on the verge of major disruption as tech start-ups tackle head-on the industry’s biggest pressure points,” says Todd Burns, President, Project and Development Services, JLL. “These startups can provide technology that helps deliver projects faster, cheaper and with fewer resources than ever before, effectively addressing the existing challenges in the industry.”
Emerging technology is opening a significant opportunity for venture capitalists and construction executives. JLL recognized this opportunity early, and last year brought on two Silicon Valley veterans to launch JLL Spark, a global business that identifies and delivers new technology-driven real estate service offerings, including a $100 million global venture fund.
JLL’s research uncovered three primary focus areas of construction tech startups:
1. Collaboration software. Considering that dozens of professionals can be working on a given construction project at the same time, leveraging cloud-based software to optimize the workflow could profoundly improve collaboration and impact the bottom line. Front-runners such as Procore Technologies, PlanGrid, Clarizen and Flux Factory are utilizing cloud capabilities, mobile platforms and dedicated design software to enable collaboration.
2. Offsite construction. As skilled construction labor becomes harder to find and general competition for construction inputs heats up, offsite construction startups are championing a different approach to how buildings are built: building component manufacturing. Offsite manufacturing and delivery of finalized components to the construction site equals shorter assembly time and more centralized production to help offset the labor pinch and rising costs. Industry leaders include Katerra, Blu Homes and Project Frog.
3. Big data and artificial intelligence (AI). From materials delivery to equipment maintenance, predictive data and automation tools can collect data on nearly every aspect of a construction project, resulting in data pools at risk of going to waste. Armed with big data and AI software, construction teams can make more informed business decisions to save time and money by extending the life of expensive equipment, reducing worksite risk and automating simple business processes. Top startups in this area include Uptake Technologies, Flux Factory and SmartEquip.
Since 2009, investors have closed 478 Construction Technology funding deals totaling $4.34 billion, underscoring the continued volume of construction projects and the recent urgency to innovate and offset industry costs. The huge bump in Construction Technology investment in 2018 is hopeful proof of an impending surge of technology and hardware marvels, promising to optimize the industry.
Related Stories
| Aug 11, 2010
Glass Wall Systems Open Up Closed Spaces
Sectioning off large open spaces without making everything feel closed off was the challenge faced by two very different projects—one an upscale food market in Napa Valley, the other a corporate office in Southern California. Movable glass wall systems proved to be the solution in both projects.
| Aug 11, 2010
High School in a Hurry
One of the more compelling arguments for charter schools is their theoretical ability to streamline decision making. Eliminate all those layers of bureaucratic fat that clog the arteries of most public school systems, the argument goes, and decisions can be made to flow much more smoothly, even when it comes to designing and building a major school project.
| Aug 11, 2010
Right-Sizing Healthcare
Over the past 30 years or so, the healthcare industry has quietly super-sized its healthcare facilities. Since 1980, ORs have bulked up in size by 53%, acute-care patient rooms by 77%. The slow creep went unlabeled until recently, when consultant H. Scot Latimer applied the super-sizing moniker to hospitals, inpatient rooms, operating rooms, and other treatment and administrative spaces.
| Aug 11, 2010
Silver Award: Pere Marquette Depot Bay City, Mich.
For 38 years, the Pere Marquette Depot sat boarded up, broken down, and fire damaged. The Prairie-style building, with its distinctive orange iron-brick walls, was once the elegant Bay City, Mich., train station. The facility, which opened in 1904, served the Flint and Pere Marquette Railroad Company when the area was the epicenter of lumber processing for the shipbuilding and kit homebuilding ...
| Aug 11, 2010
Special Recognition: Durrant Group Headquarters, Dubuque, Iowa
Architecture firm Durrant Group used the redesign of its $3.7 million headquarters building as a way to showcase the firm's creativity, design talent, and technical expertise as well as to create a laboratory for experimentation and education. The Dubuque, Iowa, firm's stated desire was to set a high sustainability standard for both itself and its clients by recycling a 22,890-sf downtown buil...
| Aug 11, 2010
Hilton President Hotel
Once an elegant and fashionably trendy locale, the Presidential Hotel played host to the 1928 Republican National Convention where Herbert Hoover was nominated for President, and acted as a hot spot for Kansas City Jazz in the '30s and '40s. The hotel was eventually abandoned in 1984, at which point it became a haven for vagabonds and pigeons, collecting animal waste and incurring significant s...
| Aug 11, 2010
Bowing to Tradition
As the home to Harvard's Hasty Pudding Theatricals—the oldest theatrical company in the nation—12 Holyoke Street had its share of opening nights. In April 2002, however, the Faculty of Arts and Sciences decided the 1888 Georgian Revival building no longer met the needs of the company and hired Boston-based architect Leers Weinzapfel Associates to design a more contemporary facility.
| Aug 11, 2010
AIA course: MEP Technologies For Eco-Effective Buildings
Sustainable building trends are gaining steam, even in the current economic downturn. More than five billion square feet of commercial space has either been certified by the U.S. Green Building Council under its Leadership in Energy and Environmental Design program or is registered with LEED. It is projected that the green building market's dollar value could more than double by 2013, to as muc...
| Aug 11, 2010
BIM adoption tops 80% among the nation's largest AEC firms, according to BD+C's Giants 300 survey
The nation's largest architecture, engineering, and construction companies are on the BIM bandwagon in a big way, according to Building Design+Construction's premier Top 50 BIM Adopters ranking, published as part of the 2009 Giants 300 survey. Of the 320 AEC firms that participated in Giants survey, 83% report having at least one BIM seat license in house, half have more than 30 seats, and near...
| Aug 11, 2010
Thrown For a Loop in China
While the Bird's Nest and Water Cube captured all the TV coverage during the Beijing Olympics in August, the Rem Koolhaas-designed CCTV Headquarters in Beijing—known as the “Drunken Towers” or “Big Shorts,” for its unusual shape—is certain to steal the show when it opens next year.
