Innovator of the Year: Katerra
Katerra plans to provide all labor on a job site. That means providing plumbers, electricians, framers, drywallers and painters.
Katerra emerged from the idea that a single developer should be able to aggregate material buys across projects.
The construction process has long been segmented. Architects design and specify, engineers help ensure that design meets code, and contractors and their subs find the materials and put it all together.
The emerging category of offsite construction is one way the industry is shaking that up. However, Katerra, based in Menlo Park, CA, is taking that a step further.
Using factory-based construction to automate and standardize design and construction, the firm is creating a "continuum" of services to replace the typical chain of handoffs, said Mike Rock, president of construction at Katerra.
"We've attacked the industry holistically, looking at what it could be if you modeled it after technology," he said. "The one piece that was missing, in all the companies I've been in, is an underlying technology system so you don't have to duplicate activities."
Katerra was born from the idea that a single developer should be able to aggregate material buys across projects. That would lower the cost for items like faucets, for example, among several apartments that would likely use the same grade of product anyway. When they tried that on co-founder Fritz Wolff's projects with The Wolff Company, a multifamily real estate private equity firm based in Scottsdale, AZ, general contractors pushed back.
So, they turned the idea into a business of its own. That was in 2015. Since then, Katerra has grown to more than 1,000 employees across offices in four countries. It has a production facility in Phoenix, where it makes wall panels, floor systems, trusses and more. The company announced plans this fall to open a mass-timber production facility in Spokane Valley, WA. When it opens in 2018, the company will be able to produce CLT wall panels and floor systems and glulam structural beams while helping to scale production of CLT in the U.S.
Katerra also wants to be able to provide all the labor on a job site within the next two years. That means offering its own plumbers, electricians, framers, drywallers, painters and other trades.
Today, they use a mix of in-house and subcontracted labor, but centralized design and contractor services means the company still benefits from the economies of scale their systemized process delivers.
"We're not pushing risk around the table," Rock said. "We're not writing heavy contracts to try to do it the old-fashioned way. We're just saying: 'We know we're going to own it; we know we're going to build it; and we know we're going to deliver it properly.'"
The company started in multifamily — including senior and student housing — but has six custom homes underway in Idaho, and could expand into commercial and retail, Rock said. The company has nine projects currently under construction, with two aiming to wrap up by the end of 2017 and 70 other projects in design.