In our previous article, we made reference to the fact that luxury commercial construction projects demand a much more proficient, methodical and organized construction management approach than what a typical custom home project demands. Interestingly, during the numerous discussions we’ve had with residential architects, clients and those looking to enter the construction business, they are often surprised to find out that despite all of the commonalties in craftsmanship required to build a luxury residence – many of the pitfalls found in the execution of wood framed projects, are non-existent in the commercial world.
Our business has the benefit of being anchored in both worlds. It means that we see first hand the dichotomy in the construction skills and abilities it takes to deliver a luxury high-rise tower vs. a bespoke luxury custom home. This article will address some of the key differences.
According to the research from the U.N., by 2050, seven out of ten people globally in modern societies will live in cities. In fact, cities with populations between 500,000 and 1 Million people will grow the fastest. These trends have been going on for several decades. In order to meet the needs of this growth, high rise residential construction continues to keep pace. According to U.S. Census Bureau data, demand for multifamily residences is continuing its upward path. There were 42,878 renter occupied units in the second quarter of 2015, a 4.9% increase from a year ago.
Preliminary results from the U.S. Energy Information Administration’s Commercial Buildings Energy Consumption Survey (CBECS) show that there were 5.6 million commercial buildings in the United States in 2012, the most recent data available, comprising 87.4 billion square feet of floorspace. In August of 2015, The National Association of Relators estimated that vacancy rates for commercial office, retail and industrial vacancies continued to fall by at least 10%.
So, commercial real estate is in demand. The stable and recurring income streams created by new buildings means that they are an asset class that institutional investors on Wall Street will consistently seek for long-term growth and investment. In fact, considering that the lifespan of a high-rise residential structure could be well over a hundred years, it stands to reason that the best-in-class architects and builders are tapped to design and construct these buildings.
High-rise buildings must be built to the most rigorous industry standards. They must stand up to the test-of-time, extreme weather, massive wind shear, earthquakes and the significant live and dead loads of the internal contents, among numerous other factors. Durability, precision and longevity are paramount because these commercial real estate investments must yield profitable returns to investors for many decades after construction.
The massive amounts of capital flowing into luxury high-rise assets means that architects and builders are able to push the envelope of cutting-edge design and construction. They have for some time. One of the key effects is that the commercial construction industry attracts and trains the best and brightest young engineers and construction management professionals from America’s colleges and universities.
In contrast to the luxury high-rise building sector, the barrier to entry into wood framed residential construction is very low. There is neither a university degree nor training required. With tools and a truck, anyone can be in the residential building business. This explains why residential high-rise builders will typically turn away resumes of prospects coming from the home building sector. It also shows why residential custom builders actively seek employees with high-rise commercial project experience.
Greater project complexities, complicated design details, challenging site logistics, a much larger quantity of labor disciplines, exacting material specifications, scores of worldwide suppliers to coordinate and the sheer volume of construction funds under management require a higher level of construction knowledge, expertise and sophistication in the high-rise sector. In fact, if projects aren’t delivered on budget, on schedule and exactly to the quality standards specified, there is a very high financial price for failure. So, the level of pre-planning, project controls engineering and project management capabilities have to be orders-of-magnitude stronger than on a residential project.
A custom home might involve $3 million, 20 companies and up to 50 workers. A luxury high-rise project typically encompasses $200 million, more than 100 companies and more than 400 workers.
In most of the home building industry, builder-driven design permeates the market and there remains a pervasive attitude that builders “know better” than the architects. In luxury high-rise projects, that kind of attitude is neither acceptable nor tolerated. High-rise commercial is the pinnacle of construction protocol. It’s the place where architects are rightfully placed at the top of the construction value chain and the builder must be able to meet or exceed the most advanced industry design standards.
For example, a luxury high-rise project has thousands of intricacies and interactions between architectural, mechanical, electrical, plumbing and structural building systems and components. A lapse in quality at any stage can have catastrophic repercussions. This means that the project management proficiencies and quality control measures on high-rise projects are much more advanced than on any home residential project. Just a few examples of quality control measures for high-rise construction include:
- Structural QAQC testing and inspections
- Third-party architectural engineering inspection agencies
- Advanced cost engineering and reporting
- Multiple mock ups and independent performance testing prior to shipping
- Advanced geotechnical engineering practices
- BIM (Building Information Modeling) to mitigate system conflicts
- Negative pressure water testing on façades
- Exhaustive peer reviews of mechanical, electrical and plumbing systems
- In situ testing of waterproofing and flashing/roofing details
- Multiple third-party pre-close in inspections
- Meticulous shop drawings and submittals reviews and pre-start meetings
- Continuous worker quality improvement training programs
This might be a good time for custom home clients to ask themselves if they would prefer highly trained construction management professionals, capable of managing massively complex projects, building their bespoke, high-end homes. Conversely, they could choose a builder assembled from graduates of deck building, home remodeling or some other industries. Perhaps the better question they should ask themselves is why they would use anyone but a builder comprised of executives and craftsmen with significant high-rise residential project experience.
With this is mind, in our next article, we will begin to share some of the best practices that we have developed in our more than 20 years of commercial building experience, that we have successfully leveraged in our custom home building projects.
Luke Gladis is the Managing Director of Ironstar Building Company (www.ironstar.net) – the design-driven, elite home developer. It works exclusively with premiere residential architects to build breathtaking homes for its clients and its own speculative real estate projects. Mr. Gladis is responsible for daily operations, execution and successful delivery of all Ironstar custom home projects. Prior to joining Ironstar, he spent the previous ten years managing construction of some of the most exquisite fine homes in the New York City metropolitan region, with project budgets averaging more than $10 million.