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
Fleet Library, Rhode Island School of Design
When tasked with transforming an early 1920s Italian Renaissance bank building into a fully functional library for the Rhode Island School of Design, the Building Team for RISD's Fleet Library found itself at odds with the project's two main goals. On the one hand, the team would have to carefully restore and preserve the historic charm and ornate architectural details of the landmark space, d...
| Aug 11, 2010
John Adams Courthouse
After more than a century without a substantial renovation, Old Suffolk County Courthouse, designed in Neo-Classical style by Boston's first city architect, George Clough, was overdue for a facelift. Enter the makeover team: Boston-based architects Childs, Bertman, Tseckares and general contractors Suffolk Construction/NER Construction Management.
| Aug 11, 2010
Lifestyle Hotel Trends Around the World
When the Rocco Forte Collection opens the Verdura Golf & Spa Resort in Sicily in early 2009, the 200-room luxury property will be one of the world's newest lifestyle hotels. Lifestyle hotels cater to guests seeking a heightened travel experience, which they deliver by offering distinctive—some would say avant-garde, or even outrageous—architecture, room design, amenities, and en...
| Aug 11, 2010
Special Recognition: Kingswood School Bloomfield Hills, Mich.
Kingswood School is perhaps the best example of Eliel Saarinen's work in North America. Designed in 1930 by the Finnish-born architect, the building was inspired by Frank Lloyd Wright's Prairie Style, with wide overhanging hipped roofs, long horizontal bands of windows, decorative leaded glass doors, and asymmetrical massing of elements.
| Aug 11, 2010
Giants 300 Index and Methodology
BD+C's annual Giants 300 list consists of U.S. firms that designed or constructed the largest volume of commercial, institutional, industrial, and multifamily residential buildings in 2008. Each spring, the editors survey the country's largest firms, ranking the top 300 across six categories: architects, architect/engineers, engineers, engineer/architects, contractors, and construction managers.
| Aug 11, 2010
Joint-Use Facilities Where Everybody Benefits
Shouldn’t major financial investments in new schools benefit both the students and the greater community? Conventional wisdom says yes, of course. That logic explains the growing interest in joint-use schools—innovative facilities designed with shared spaces that address the education needs of students and the community’s need for social, recreation, and civic spaces.
| Aug 11, 2010
The pride of Pasadena
As a shining symbol of civic pride in Los Angeles County, Pasadena City Hall stood as the stately centerpiece of Pasadena's Civic Center since 1927. To the casual observer, the rectangular edifice, designed by San Francisco Classicists John Bakewell, Jr., and Arthur Brown, Jr., appeared to be aging gracefully.
| Aug 11, 2010
9 Rooftop Photovoltaic Installation Tips
The popularity of rooftop photovoltaic (PV) panels has exploded during the past decade as Building Teams look to maximize building energy efficiency, implement renewable energy measures, and achieve green building certification for their projects. However, installing rooftop PV systems—rack-mounted, roof-bearing, or fully integrated systems—requires careful consideration to avoid d...
| Aug 11, 2010
Education's Big Upgrade
Forty-five percent of the country's elementary, middle, and high schools were built between 1950 and 1969 and will soon reach the end of their usefulness, according to the 2005–2008 K-12 School Market for Design & Construction Firms, published by ZweigWhite, a Massachusetts-based market-research firm.
| Aug 11, 2010
Burr Elementary School
In planning the Burr Elementary School in Fairfield, Conn., the school's building committee heeded the words of William Wordsworth: Come forth into the light of things, let nature be your teacher. They selected construction manager Turner Construction Company, New York, and the New York office of A/E firm Skidmore, Owings & Merrill to integrate nature on the heavily wooded 15.