Future of Housing
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Alex Paci
Alex Paci is an intelligence analyst at CB Insights covering startup and venture
capital trends in real estate and financial services. His research has been cited
in Wired, The New York Times, The Financial Times, and The Wall Street Journal.
@alexander_paci | apaci@cbinsights.com
Intelligence Analyst
A B O U T T H E A N A L Y S T
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Contents
1 1
Housing & construction
trends
1 6
Startups & new construction
techniques
2 7
FAMGA initiatives
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9
Driven by a convergence of technology development and
market need, entrepreneurs and technology companies alike
have drawn aim at the residential construction industry.
Insurgent startups are testing a variety of construction
techniques, while big technology companies are participating
through direct development projects.
T H E B I G I D E A
B A C K G R O U N D & T R E N D S
Housing & construction trends
S T A R T U P S
Startups & new construction techniques
F A M G A P A R T I C I P A T I O N
Big tech's real estate initiatives
H O U S I N G O F T H E F U T U R E F L A S H B R I E F I N G
1
2
3
10
B A C K G R O U N D & T R E N D S
Housing & construction trends
S T A R T U P S
Startups & new construction techniques
F A M G A P A R T I C I P A T I O N
Big tech's real estate initiatives
H O U S I N G O F T H E F U T U R E F L A S H B R I E F I N G
1
2
3
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What's driving this trend? A national housing shortage
The US has a housing shortage of 7.3 million
units.
Home prices rose 6.2% in 2017, two times more than income, and three
times inflation. One in four Americans is "severely rent burdened"
(paying more than 50% of their monthly income on housing) as a
consequence.
Lack of labor, as well as limited land supply and
strict zoning regulations are inhibiting
construction of new homes.
In Seattle, for instance, single-family accounts for 49% of all
"developable land mass," with 8% devoted to multi-family, and 8% for
commercial real estate. The majority of new housing is focused on
multi-family.
12
Source: WSJ, Sidewalk Labs
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"No matter what we do to deliver more value to
customers, the fundamental problem is that there aren't
enough homes to buy."
M O R E H O M E S N E E D E D
Glenn Kelman
President & CEO, Redfin
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The US construction industry invests 0.5% of annual
construction value in R&D. This compares to 3.7% for
automotive, and 8.8% for computing & electronics.
This makes the economics of housing innovation hard.
O N E B I G R E A S O N F O R T H E L A C K O F N E W H O U S I N G I S T H E C O S T O F C O N S T R U C T I O N
Source: Sidewalk Labs
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"It's shocking how poorly things work. There's a lack of
quality processes throughout the system."
Michael Marks
Chairman, Co-Founder, Katerra
B A C K G R O U N D & T R E N D S
Housing & construction trends
S T A R T U P S
Startups & new construction techniques
F A M G A P A R T I C I P A T I O N
Big tech's real estate initiatives
H O U S I N G O F T H E F U T U R E F L A S H B R I E F I N G
1
2
3
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Offsite: modular and prefabricated
Factory production
I N N O V A T I O N S I N C O N S T R U C T I O N T E C H N O L O G Y
Companies are investing in repeatable
processes for the construction of
modular units or component parts.
Supply chain & BIM design
Companies that own both the design
and construction process have
developed standardized design to
maximize materials efficiency and
procurement.
Energy & Sustainability
Builders are turning to carbon neutral
and sustainable materials like tall
timber and mycelium.
17
Blokable manufactures
structured building systems
for developers to bring small
format residential, retail, and
mixed-use projects rapidly to
market.
S E L E C T I N V E S T O R ( S )
Borealis Ventures, Jason Calacanis,
Kapor Capital, Urban.us, Vulcan Capital
S T A C K A B L E H O M E U N I T S
Total Funding
$6.08M
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Katerra's integrated
technology offering connects
Building Information
Modeling (BIM) tools and
computational design directly
to an ERP global supply
chain. Materials arrive at
construction sites just-in-time
and ready to install.
S E L E C T I N V E S T O R ( S )
DFJ Growth Fund, SoftBank Group,
Foxconn Technology Company
O W N I N G T H E C O N S T R U C T I O N P R O C E S S
Total Funding
$1.16B
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Katerra expanding via acquisitions and factories
Katerra is expanding its
capacity. Recently the company
acquired Fields Construction
Company of New Jersey. Field's
will rebrand and adopt Katerra's
technology practices.
The company plans to open six
manufacturing plants in 2019,
including a timber factory in
Spokane, Washington.
The plant will produce CLT, or
cross-laminated timber.
20
Source: Inman, Building Design + Construction
The potential of tall timber construction
The T3 building, pictured below, is one of the largest timber buildings in North America at seven stories and
220,000 sq/ft. Tenants include Amazon.
21
Canada pushing timber forward in construction
Given the abundance of lumber in Canada,
much of the development of timber
construction is occurring there.
In October of 2017, Canada's Minister of
Natural Resources, Jim Carr, announced a
mass timber program called Green
Construction Through Wood which
encouraged timber construction in tall
buildings.
This is the second such timber program, the
first being the Tall Wood Building
Demonstration Initiative, a program which
resulted in the 18 story Brock Commons
Tallwood House at the University of British
Columbia, the tallest majority wood structure
in the world (right).
22
Source: Canada.ca, NRCN.gc.ca
pushes co-living as a way to repurpose space
Starcity is an example of a company in the growing coliving space. The San Francisco-based startup is a graduate of Y Combinator and has raised
$18.6M to date, most recently via a $16.4M Series A from Alrai Capital, Bullpen Capital, Invest AG, and Y Combinator.
23
Common offers flexible
shared housing connecting
vetted members to private
rooms in furnished
properties.
S E L E C T I N V E S T O R ( S )
Maveron, Norwest Venture Partners,
8VC
A D U L T D O R M S
Total Funding
$65M
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"I'm not looking to change the way people live. I'm looking
to solve a housing need."
S O L V I N G F O R A M A R K E T N E E D
Brad Hargreaves
CEO, Common
Collections
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D I G G I N G D E E P E R
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capabilities highlighted during this briefing.
Trends
Prefab trends search
Reports & Research
Construction tech market map
Offsite Construction Companies
WeWork report
Profiles
Blokable
Starcity
Katerra
Common
B A C K G R O U N D & T R E N D S
Housing & construction trends
S T A R T U P S
Startups & new construction techniques
F A M G A P A R T I C I P A T I O N
Big tech's real estate initiatives
H O U S I N G O F T H E F U T U R E F L A S H B R I E F I N G
1
2
3
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In addition to insurgent startups, some of the largest technology
companies are driving innovation via partnerships, paid projects,
and developments.
+
While not the most significant foray into
construction, Amazon has recently formed a
partnership with Lennar, Shea, and Brookfield
Homes, some of America's largest residential
home builders and developers.
The terms of the Lennar partnership call for
Amazon experiences centers in California,
Florida, Georgia, Texas, Virginia, and
Washington where customers can tour Lennar
homes and interact with Amazon's suite of
smart home devices.
Amazon's smart devices will be physically
implanted into every new residence Lennar
builds.
29
Source: Amazon, The Information
developing a presence in multi-family
Separately, Amazon has crept into multi-
family real estate as well. In October 2017,
Amazon formed partnership with landlords
including AvalonBay Communities Inc., Equity
Residential, Greystar, and Bozzuto Group, to
place package delivery lockers in buildings
representing over 850,000 units in the US.
Greystar, for instance, which manages
415,000 units, will install the Amazon locker
hub system in 125 communities, and offer the
service to all of its buildings.
30
Source: WSJ
plans for Willow Campus
Facebook has plans to expand
its campus in Menlo Park and
add residential housing.
The company will construct
1,500 units housing, of which
225 will be at below-market
rates.
Additionally, the plans call for
mixed-use retail, including a
grocery store and pharmacy, in
addition to 8 acres of plazas,
parks, and biking/pedestrian
paths.
31
Source: Facebook
+ build 300 homes
Google's largest foray into
residential construction to-date
has been its development plans
for Moffett Field in Mountain
View. The company ordered 300
modular housing units,
spending between $25-$30M on
the order. Factory OS, based in
Vallejo, California will fulfill the
order.
Factory OS claims it reduces
cost by 20% while building 40%
faster.
32
Source: Mercury News, Factory OS
In 2015, Google
restructured as
Alphabet.
Sidewalk Labs is
dedicated to urban
innovation efforts.
33
and a bold plan to rewrite the city
Source: Sidewalk Labs
Sidewalk Labs lays out a vision for a highly sophisticated neighborhood in Toronto, measured by a sensor network
and served by progressive approaches to residential, retail, energy, and transport solutions.
34
Expansive plans tied together by a digital layer
The neighborhood's digital layer
will be achieved via a net of
sensors and cameras that will
provide an "unprecedented
degree of insight into the
physical environment." The
digital platform will have four
main components:
Sense
Model
Map
Account
35
Source: Sidewalk Labs
A blend of cutting edge construction methods
Modular or volumetric
construction will be
complemented by "one and two-
dimensional" components,
similar to the kind of
construction a company like
Katerra performs.
36
Source: Sidewalk Labs
Designing the 'Loft' for multipurpose building usage
37
Sidewalk Labs is developing a building product called Loft that integrates many of the construction techniques discussed here. The product's
thesis centers on the assumption that "ongoing and frequent interior changes" will be demanded of each building, and therefore an interior unit that
can be reconfigured within a "strong skeletal structure" is optimal; reducing the cost of future construction. This is termed 'radical mixed use,'
where residential, retail, office, and parking might occur within the same buildings.
Source: Sidewalk Labs
38
Will large technology companies and startups collaborate further on campus housing
initiatives?
Will big technology companies seek to partner with existing construction players (e.g.
Amazon expanding its partnership with Lennar)?
Will Sidewalk Labs' Toronto project lead to larger urban planning projects in major US
cities?
Are any startups in construction or coliving potential acquisition targets?
L O O K I N G A H E A D
Questions?
Twitter: @alexander_paci
Email: apaci@cbinsights.com
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