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 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.