Wood has been a primary material for construction for thousands of years and is still a popular building material, primarily for homes, in timber-rich nations such as the US, Canada and the Nordic countries.
However, it has had something of a renaissance in recent years, due to a greater appreciation of its environmental benefits and advances in technology which mean it can be used in larger buildings. Modern engineered timber products, such as cross- laminated timber, can be used in the construction of commercial properties, for everything apart from foundations.
Ascent, a 25-storey apartment block in Milwaukee, Wisconsin, in the US, recently topped out at 86.56m, making it the tallest timber building in the world, overtaking several recent projects in the US and Europe in the 80m range. However, Ascent is set to be overtaken in a few years by Rocket & Tigerli, a residential project in the Swiss city of Winterthur, which will have a 100m tower.
For a growing number of real estate investors, the use of timber is a way to reduce the embodied carbon of new developments. As Olli Haltia, senior partner and CEO at sustainable timber investment adviser Dasos Capital, says: “Wood is basically solid carbon.” The emissions from engineered timber construction are lower than from concrete and steel, furthermore, when timber is sourced from renewable forests, it is replaced with new growth which will absorb tons of carbon before it is harvested (see chart). Wood can also be recycled, to be used in construction again or as fuel.
Dasos has teamed up with Australia’s Cromwell Property Group to launch a €1 billion wooden buildings fund, which will invest in timber buildings across Europe. Pertti Vanhanen, managing director, Europe, for Cromwell, says: “Wooden construction reduces the embodied carbon in real estate and thus matches the objectives of institutional and other advanced real estate investors who are serious about carbon neutrality.”
The use of engineered timber products is growing by around 11% a year, says Haltia, and there is capacity to increase timber production all over the world, by allocating more land and using more efficient forestry methods.
Forests act as carbon sink
Well managed forests act as a carbon sink and soon regrow timber used in construction. For example, as revealed in Cromwell’s Timber buildings – Truly sustainable real estate report, a 2020 study estimated the wood required for a 5,000 sq m office building would be regrown by Austria’s timber forest in nine minutes.
One downside to timber construction is that it is more expensive than steel and concrete, although greater production will make it cheaper and a greater focus on the environmental cost of construction will make it more attractive. Timber is also suited to offsite modular construction, which can reduce costs.
Another barrier to growth is concern about the material’s safety, particularly with regard to fire and water damage. Engineered timber is no greater fire risk than other modern building materials and is accepted in markets such as the US and the Nordics. However, in markets such as the UK, where timber is little used, some scepticism remains, says Vanhanen. “UK building regulators are conservative, they still remember the great fire of 1666,” he says.
There are also benefits for occupiers from using timber. It is an effective insulator, so can improve building energy performance and some studies suggest wooden buildings improve wellbeing. Cromwell research suggests recently-let wooden buildings in Europe achieve a 9% premium to local prime office rents.
Timber commercial real estate is not limited to Europe and North America. In Singapore, famous for glass and steel skyscrapers, Nanyang Technical University is building a 40,000 sq m academic building. And in Tokyo, timber was used for architect Kengo Kuma’s Olympic stadium.
Also in Tokyo, Sumitomo Forestry has proposed a 350m, 70-storey skyscraper. The project is a long-term one, slated for the company’s 250th anniversary in 2041 and the current project cost is $5.6 billion, twice that of a concrete and steel equivalent.
The real estate industry’s recent focus on reducing embodied carbon is set to take wooden buildings to new heights and bringing new growth to a very traditional construction material.