2025 Industry Trends: Modular Construction and Sustainability
- Modular construction is on the rise, offering faster project completion, lower costs, and reduced waste as components are prefabricated off-site and assembled on-site.
- Sustainability is a top priority for 2025, with materials like carbon-capturing concrete, bio-based alternatives, and energy-efficient designs driving green construction.
- Resilient infrastructure is becoming essential, especially in areas prone to natural disasters, with features like impact-resistant materials and flood-resistant foundations being integrated into new developments.
Easing Development Pipeline and Cautious Growth in Self-Storage
- As of December, 790 self-storage properties were under construction, comprising 3.1% of total stock, down 10 basis points from the previous month.
- The development pipeline includes 2,053 planned and 462 prospective projects, showing developers' cautious approach amid ongoing higher interest rates.
- San Jose stands out with no new supply under construction and its new deliveries decreasing to 1.7% of starting stock. The metro’s supply growth is expected to remain flat in 2025, highlighting limited expansion in specific markets.
Our Thoughts
- Modular construction can improve project timelines and cost-efficiency, making it a valuable strategy for urban areas with high construction costs and limited space.
- Incorporating sustainability and resilience measures is critical for long-term value, meeting both regulatory requirements and tenant preferences in a competitive market.
- The slight reduction in under-construction projects suggests that developers are adopting a measured approach to prevent overbuilding and protect rate growth.
