3D printing isn’t just making a splash — it’s beginning to truly build a following in concrete applications. I mean that literally, as additive manufacturing technologies come into play with more regularity in architecture, from models to fully finished buildings made via a growing number of materials, from concrete to clay. As with any major emerging trend that has the capacity to reshape an industry, 3D printing is subject to significant scrutiny from all sides. Among the agencies keeping close watch on 3D printing is Deloitte, a global enterprise offering audit, consulting, advisory, and tax services.
Deloitte, the largest of the Big Four accounting firms, is widely known as the world’s largest professional services network, based on both revenues ($36.8 billion FY2016) and employment (244,400). The US-headquartered operation holds many esteemed claims to fame — ranked number one by revenue in market share, global consulting, management consulting, and as one of the top 100 companies to work for as well as the best place to launch a career — and keeping abreast of the latest trends in a number of industries is key to the firm’s rankings. The company prepares regular reports on a variety of areas, including the commercial real estate market. Commercial real estate (CRE) represents a significant industry the world over, and Deloitte points in their latest report that disruption is imminent.
I read the company’s most recent CRE report, “Innovations in commercial real estate: Preparing for the city of the future,” in which experts detailed themes and areas of focus for the 2017 state of the market:
“In our 2017 Commercial Real Estate Industry Outlook, we have identified five themes that CRE owners should consider integral to their business strategy. Most of these themes are enablers, which if used strategically and timely, can equip CRE companies to make their physical space future-ready:
- Future of mobility
- Occupant health and wellness
- Internet of Things
- 3D printing technology
- Demographic data and predictive analytics”
The report was authored by Robert T. O’Brien, Global Real Estate Sector Leader; Jim Eckenrode, Managing Director, Center for Financial Services; and Surabhi Kejriwal, Research Leader, Real Estate. The report is fairly thorough, but the new focus on 3D printing technology in this sector certainly elicited even more curiosity. I had A Few Questions For Deloitte, eager to learn more, and study author and real estate expert Kejriwal of the Deloitte Center for Financial Services, who has examined 3D printing’s implications for the CRE industry, was kind enough to provide insights into these findings for 3DPrint.com.
When did Deloitte first become aware of the potential impact that 3D printing might have on the construction industry? Specifically as related to commercial real estate?
Deloitte has been researching the impact of 3D printing over many years. We had classified 3D printing as one of the key innovative ideas in 2013 likely to affect numerous industries, including construction. We also identified it 3D printing as one of the major technology predictions for the future in 2015.
More specifically to commercial real estate, Deloitte identified 3D printing as one of the major disruptive technologies likely to affect the engineering and construction sector during a conference in June 2015. We’ve since published work calling 3D printing one of the few technologies that satisfy the mantra of “faster, cheaper, better” when compared with traditional construction methods for commercial buildings using steel and concrete.
3D printing has first made its way into use through architectural modeling; how has this application served as an entry point into the broader CRE industry?
3D printing was initially used in the development of scale models of buildings or cities to better understand the current and future development scenario and to add more rigor to future investment decisions around location, building design, and construction. The gradual evolution of the technology has helped to develop larger printers and subsequently layers of print to form vertical structures such as homes and buildings. This also helped to improve construction quality and durability.
Deloitte is predicting major impacts on the CRE outlook from both 3D printing and the Internet of Things; how long do you think it will be before these impacts are felt on a broader basis in tangible ways? How do you realistically see adoption rates of 3D printing in CRE rising over the next five years? Ten years? What factors might limit adoption rates?
With respect to 3D printing, we are likely to see extensive research and development efforts over the next five years and a more tangible application in about a decade. However, a lot will depend on the evolution of building codes and safety standards.
In comparison, Internet-of-things (IoT) technology will potentially have a wider adoption over the next five years, especially if companies are able to address some of the challenges related to integration of disparate information technology (IT) systems and data privacy and security. The Deloitte Amsterdam office is a use case of an IoT technology-enabled building.
China and the UAE have been among the first major adopters of 3D printing in construction processes. When can we expect to start seeing more usable buildings made via 3D printing technologies in the Western world?
As discussed in our recently-released 2017 Commercial Real Estate Outlook, adoption of 3D printing technologies for developing usable buildings may take longer in developed markets such as the US, as it will take time for safety standards and building codes to evolve. However, we should start to see more use cases over the next decade.
Reductions in costs and construction time are among the major benefits of using 3D printing here. Can you tell us more about the extent to which these reductions can be felt? What about upon wider adoption?
We see three key benefits that have emerged in the initial use cases so far:
- Faster – due to a 50-70 percent reduction in construction time based on increased automation
- Cheaper – due to 50-80 percent lower labor costs, less wastage of material as it is an additive process, and potentially lower financing costs due to shorter execution time
- Better – due to the ability to create customized and intricate design, inbuilt insulation in 3D printed walls, and a higher sustainability footprint due to the use of recycled waste as part of the raw material and concrete
At this stage, it is difficult to predict other benefits in the event of wider adoption of the technology.
How does the mass customization of 3D technologies add to the allure of these construction methods?
Rising construction and labor costs are resulting in margin pressure for construction companies, which 3D printing can help to alleviate. 3D printing also allows developers to enhance customer engagement as it supports customized building structures and designs at minimal costs.
There are several steps that companies can take to adopt 3D printing, including:
- Invest in firms that focus on building large 3D printers or partner with leading universities to be at the forefront of 3D printing innovations in the construction sector
- Analyze financial, physical, and regulatory feasibility of 3D-print buildings
- Use 3D-printed models for development decisions
What concerns might exist so far as building codes in countries like the US with stringent standards?
The primary concern would be around safety of 3D printed structures. The existing US building codes do not include guidance on 3D printed buildings and need to evolve. For instance, 3D printed offices developed in Dubai passed stability tests by the UK and China. However, 3D printed commercial buildings have still to be tested against US building standards.
What do you hope readers will come away with as a major takeaway of this report on cities of the future and CRE?
Technology and innovation are challenging and changing traditional business models. CRE companies need to realize that disruptive changes may not be as far out as they seem.
As governments shape the cities of the future, and as innovations in the automotive sector transform personal mobility patterns, so too will CRE owners have to re-invent their strategy to prepare and respond to anticipated changes to the built environment.
Ironically, technology is also the enabler for companies looking to reinvent themselves. CRE companies have an opportunity to use technologies such as IoT, 3D printing, and advanced analytics to be innovative with respect to locating future developments, (re)designing the physical space, and aligning with changes in demographic and consumption patterns.
This would allow them to garner competitive advantage and drive topline and bottom-line growth by enhancing every aspect of their business: location decisions, property development and valuations, as well as tenant attraction, engagement, and loyalty. Ultimately, CRE companies need to act now and be experimental, rather than only plan for the future.
3D printing is sure to continue to impact many areas of life — in planning for the ‘city of the future,’ we all need to be aware of the broad-reaching uses and implications of the latest technologies. Deloitte is doing its part to help us to stay on top of the realistic expectations we can have.