Mass Timber What Is the Long-Term Financial Value? By Jeff Bolinger, AIA, GSBS Architects Mass timber was introduced to the building market in the 1990s and has steadily become a popular and desired structural building system throughout the world. In Utah, it has been used sporadically for about a decade, though not as a mainstream structural system. Today, many professionals in the AE community are well aware of the basic concept and potential advantages of mass timber, having seen it used in projects across the county, and in the state. One question that lingers, as momentum grows, is “What is the long-term financial value of using a mass timber system, when the dollar-to-dollar hard-cost numbers, as compared to the equivalent system using steel or concrete, is potentially higher?” Keeping the focus strictly on the hard-cost comparison ignores the broader financial value that could make mass timber use a great long-term choice. The following are a few key factors to consider when looking at the long-term financial picture. Market Differentiation The unique sustainability and aesthetic advantages that the use of mass timber offers have always been at the forefront of its perceived value; however, there are financial advantages that come with its use as well. One of the advantages is the market differentiation that mass timber buildings afford. In a study by WoodWorks entitled “Mass Timber Business Case Studies,” it was found that office and multi-family buildings that are built with mass timber tend to “lease up faster than submarket norms, which translates to higher net incomes, lower income volatility, better internal rates of return, and better ability for owners to refinance or sell faster, creating an overall lower risk.” They also found that mass timber buildings tend to attract sought-after tenants, which translates Weber Basin Water Conservancy District, GSBS Architects to “better rent collection, lower cap rates, and more stable occupancy.” WoodWorks Representative Chelsea Drenick, who supports design teams in Utah, explains, “Generally, customers are becoming more sustainability-conscious and placing pressure on developers to lower the carbon footprint of new construction. The global focus on climate change could increasingly incentivize construction companies to factor sustainability into their projects, construction processes, and designs.” Though the initial hard cost of mass timber use can be higher than other options, the potential for market differentiation can be a significant financial value long-term. Construction-Related Costs A second key factor regarding the financial value of mass timber use is the reduction of the overall time of construction and, in turn, the reduction of the total project cost. This reduction is most magnified when the structural system is fully mass timber, as opposed to a hybrid system, as the pre-fabricated nature of mass timber parts allows for rapid erection time. Members are brought to the site pre-cut and ready for installation, where they are simply craned into place and secured on site. This allows the contractor to have fewer workers on site, erect the structure, and save overall project time. The financial savings due to reduced labor costs can be large if the time savings allow an owner to get into a space and start collecting revenue early. In an article published by Think Wood, Douglas H. Evans and his colleagues assert, “An average of three case study comparisons, (a retail space, an office space, and a charter school), of mass timber buildings to conventional construction, showed an average of $5.81 per square foot in total cost reduction calculated on a 25% savings 19
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