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
| Sep 13, 2010
China's largest single-phase hospital planned for Shanghai
RTKL's Los Angles office is designing the Shanghai Changzheng New Pudong Hospital, which will be the largest new hospital built in China in a single phase.
| Sep 13, 2010
'A Model for the Entire Industry'
How a university and its Building Team forged a relationship with 'the toughest building authority in the country' to bring a replacement hospital in early and under budget.
| Sep 13, 2010
3D Prototyping Goes Low-cost
Today’s less costly 3D color printers are attracting the attention of AEC firms looking to rapidly prototype designs and communicate design intent to clients.
| Aug 11, 2010
Underwriters Laboratories, ICC Evaluation Service announce dual evaluation and certification program for building products
Underwriters Laboratories (UL), the leading product safety testing organization, and ICC Evaluation Service, Inc (ICC-ES), the United States' leader in evaluating building products for compliance with code, today announced a partnership that will provide the building materials industry with a Dual Evaluation and Certification Program for building products.
| Aug 11, 2010
Minneapolis Public Housing authority, Honeywell launch energy retrofit program
Minneapolis Public Housing Authority and Honeywell today announced a $33.6-million energy efficiency and facility renewal program that will help the housing authority improve its infrastructure, reduce its impact on the environment, and save more than $3.7 million in utility costs per year. Local contractors will also complete a majority of the work for the program, one of the largest of its kind for a public housing authority, helping boost the Twin Cities job market.
| Aug 11, 2010
Shepley Bulfinch announces merger of Merzproject
National architecture firm Shepley Bulfinch of Boston and Merzproject of Phoenix today announced their merger. The merger unites Shepley Bulfinch, one of the country’s leading design firms, and Merzproject.
| Aug 11, 2010
The New Yorker's David Owen: Why Manhattan is America's greenest community
David Owen is a staff writer at The New Yorker and the author of 14 books, most recently Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability, in which he argues that Manhattan is the greenest community in America. He graduated from Harvard and lives in Washington, Conn., where he chairs the town planning commission.
| Aug 11, 2010
Brown Craig Turner opens senior living studio
Baltimore-based architecture and design firm Brown Craig Turner has significantly expanded its housing design capabilities and expertise with the launch of its new senior living studio.
| Aug 11, 2010
Economic conditions to cause drag on cement consumption
The conditions facing the construction industry are likely to remain weak for another year or more, causing a drag on cement consumption, according to the most recent economic forecast from Skokie, Ill.-based Portland Cement Association (PCA).
