Tempered Optimism: Finding Opportunities in Tough Times

Periods of economic challenge almost always contain a legitimate component of opportunity. Naturally, it’s easy to be troubled; in times like these, some people are bound to fall prey to gloom and despair. But the truth is that money is available and genuine prospects for real estate development exist even in current circumstances.

Tight credit and investor fears are at the heart of current worldwide economic troubles. Needless to say, these basic problems directly affect development work. Even so certain specific markets in the U.S. and abroad offer legitimate development opportunities. And for many of these niches, high-quality multi-unit systems-built construction remains a perfect fit.

Where can these niche opportunities be found? You’ll see them in a wide range of geographic areas and a number of still-active markets.

Consider the relative strength of the euro versus the dollar. Current exchange rates mean that more Europeans – millions of whom have long been interested in visiting the United States – can travel here very affordably. Hotel occupancy rates in many of our tourism markets are up, driven by a substantial influx of foreign tourists. What’s more, those occupancy rates are projected to remain strong.

This means that opportunities for new hotel construction look good now and in the longer term. Systems-built construction is an excellent option for the hospitality industry because it provides controlled, predictable costs; because it’s suitable for urban environments; and because it offers rapid completion schedules.

Savvy observers of the American market recognize that dormitory construction is also in line for long-term growth. The demographics explain it: in each of the next 12 years, more than 4 million Americans will turn 18. As a result, the requirement for new student housing will stay strong for years to come. For dormitories, as for other types of construction, the controlled costs and fast completion of systems-built construction make it an ideal choice. In previous posts, we’ve shown that colleges and universities have found systems-built dormitories make it easier to provide apartment-style amenities that influence students’ selection of schools. This is one more advantage that makes modular construction highly competitive for such projects.

In other countries, powerful demographic forces define an unmistakable profile of opportunity. In 2005, there were 80 million people more than 80 years old worldwide. During the next quarter-century, their numbers will more than double, rising to 197 million by 2030. One result: steady increases in demand for assisted living housing and nursing homes.

What else shapes development opportunity tomorrow and the day after? Earthquake and disaster relief demand the ability to provide high-quality, permanent housing with short lead times. Economic growth in Asia and the Middle East brings with it a spectrum of exciting opportunities. Demographic analysts project, for example, that India’s population will outpace China’s by 2030. Vast new workforce housing developments will be an inevitable feature of this future. Here at home, likewise, constant population growth will powerfully support the need for new multi-unit construction.

The meaning of all this is clear. Defying the credit crunch and investor concerns, many significant projects here and elsewhere will go forward. When projects are strong on equity, and when they dovetail with market forces and demographic trends, there’s a good chance that they’ll be built.

Steel Yourself – Choosing the Strongest Building Material

What makes steel so effective in construction applications can be summed up in one simple sentence: It has the highest strength-to-weight ratio of any building material. For many, many projects, there’s no more efficient or cost-effective solution. And for many system-built multi-family residence projects – any that stand more than four stories high – steel is the only real option.

For every steel project, Deluxe insists on post-and-beam tube steel for all of the load-bearing members. We complement that with lighter-gauge steel for studs in the walls. The overall effect is commanding strength and manufacturing flexibility, a combination that enables us to provide system-built multi-family structures up to 12 stories in height.

Our steel framed modules – like any we build – enable rapid jobsite installation. But there’s a whole string of serious additional benefits that go with steel – benefits to both the builder and the building end user.

One fundamental advantage: Steel doesn’t burn or add fuel to a fire. Put it together with fire suppression systems, and it will meet the requirements of building codes nationwide – and those codes are tough. For multi-family, multi-story housing, this demonstrated margin of safety is especially critical.

Steel is also highly stable from a dimensional standpoint. It won’t expand or contract substantially under normal conditions. In addition to maintaining essential structural integrity, this characteristic also helps retain the tight factory fit and finish we build into our buildings.

The inherent strength of steel creates buildings that are exceptionally strong, stable, and durable. In addition, that favorable strength-to-weight ratio I mentioned before makes it possible to carry longer spans than are possible with wood-framed construction.

The problems wood has with mold, fungus, or insect infestation are non-existent with steel. Bugs like termites can create serious maintenance and health issues in wood framed structures – so can mold or fungus. Steel construction is immune to all that, and it won’t rot, warp, crack or split.

Steel is green. A major portion of the structural steel we use is recycled – and that entails no sacrifice in strength or flexibility. On the other end, steel can be fully recycled at the end of its useful life. There’s also a big difference between the amount of scrap that’s generated with steel verses wood: two percent with steel, twenty percent with lumber. That’s an order of magnitude, and its environmental effect is huge.

The difference in overall quality that all this creates is impossible to ignore. Steel in system-built structures develops stronger, welded-frame, monolithic structures. The fact that steel is produced to national standards, without regional variations in quality, also contributes to consistent superior quality in the finished structures.

Comparing the cost of steel per square foot to that of other building materials is complicated. It depends on the project specs, so it’s hard to make a simple apples-to-apples comparison. Project analysis addresses the constraints on a given job, addressing questions such as time and the building’s footprint.

For a wide variety of projects, the benefits of steel are more than commensurate with the cost. When we’re building in urban areas, for instance, the structures must be taller to make the most of expensive real estate square footage. In those situations, being able to use system-built construction for mid-rise buildings – that is, maximizing the occupancy relative to the footprint – can make or break for the whole project.
In many ways, it all comes back to that unique strength-to-weight ratio. When you consider that, plus all the other benefits that steel confers, it’s a terrific option in system-built construction.