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
Putting the Metal to the Petal
The Holocaust and Human Rights Center of Maine was founded in 1985, but the organization didn't have a permanent home until May 2008. That's when the Michael Klahr Center, which houses the HHRC, opened on the Augusta campus of the University of Maine. The design, by Boston-based architects Shepley Bulfinch Richardson & Abbott, was selected from among more than 200 entries in a university-s...
| Aug 11, 2010
Great Solutions: BIM/Information Technology
4. Architectural Visualization through Gaming Technology Before 3D walkthroughs for client presentations were popular, HKS manager of Advanced Technologies Pat Carmichael and his team were working to marry gaming engines with 3D building models. "What's being tasked to us more and more is not just to show design, but to show function," Carmichael said.
| Aug 11, 2010
The softer side of Sears
Built in 1928 as a shining Art Deco beacon for the upper Midwest, the Sears building in Minneapolis—with its 16-story central tower, department store, catalog center, and warehouse—served customers throughout the Twin Cities area for more than 65 years. But as nearby neighborhoods deteriorated and the catalog operation was shut down, by 1994 the once-grand structure was reduced to ...
| Aug 11, 2010
Jefferson Would Be Proud
The Virginia State Capitol Building—originally designed by Thomas Jefferson and almost as old as the nation itself—has proudly served as the oldest continuously used Capitol in the U.S. But more than two centuries of wear and tear put the historical landmark at the head of the line for restoration.
| Aug 11, 2010
Let There Be Daylight
The new public library in Champaign, Ill., is drawing 2,100 patrons a day, up from 1,600 in 2007. The 122,600-sf facility, which opened in January 2008, certainly benefits from amenities that the old 40,000-sf library didn't have—electronic check-in and check-out, new computers, an onsite coffeehouse.
| Aug 11, 2010
American Tobacco Project: Turning over a new leaf
As part of a major revitalization of downtown Durham, N.C., locally based Capitol Broadcasting Company decided to transform the American Tobacco Company's derelict 16-acre industrial plant, which symbolized the city for more than a century, into a lively and attractive mixed-use development. Although tearing down and rebuilding the property would have made more economic sense, the greater goal ...
| Aug 11, 2010
Great Solutions: Healthcare
11. Operating Room-Integrated MRI will Help Neurosurgeons Get it Right the First Time A major limitation of traditional brain cancer surgery is the lack of scanning capability in the operating room. Neurosurgeons do their best to visually identify and remove the cancerous tissue, but only an MRI scan will confirm if the operation was a complete success or not.
| Aug 11, 2010
Bronze Award: Alumni Gymnasium Renovation, Dartmouth College Hanover, N.H.
At a time when institutions of higher learning are spending tens of millions of dollars erecting massive, cutting-edge recreation and fitness centers, Dartmouth College in Hanover, N.H., decided to take a more modest, historical approach. Instead of building an ultra-grand new facility, the university chose to breathe new life into its landmark Alumni Gymnasium by transforming the outdated 99-y...
| Aug 11, 2010
Great Solutions: Collaboration
9. HOK Takes Videoconferencing to A New Level with its Advanced Collaboration Rooms To help foster collaboration among its 2,212 employees while cutting travel time, expenses, and carbon emissions traveling between its 24 office locations, HOK is fitting out its major offices with prototype videoconferencing rooms that are like no other in the U.
| Aug 11, 2010
Gold Award: Westin Book Cadillac Hotel & Condominiums Detroit, Mich.
“From eyesore to icon.” That's how Reconstruction Awards judge K. Nam Shiu so concisely described the restoration effort that turned the decimated Book Cadillac Hotel into a modern hotel and condo development. The tallest hotel in the world when it opened in 1924, the 32-story Renaissance Revival structure was revered as a jewel in the then-bustling Motor City.
