US modular housebuilder muscles into Europe’s living sector

Volumetric Building Companies (VBC), a global modular building specialist headquartered in Philadelphia, has just secured its first contract in Germany – the offsite construction of a 500-bed hotel for the Tropical Islands resort near Berlin – and is confident it will be getting many more in the near future.

‘This is one of a number of projects that we have identified,’ says Andy Smith, who was appointed 12 months ago to lead the US group’s business expansion in the UK. ‘The pipeline in the UK is growing to a healthy level and we are seeing strong interest in VBC’s building solutions in mainland Europe as well. We are primarily targeting the UK and Germany but we also have a couple of early stage projects in Italy, in the hospitality sector.’

The company, which is backed by Pimco, a $2 trl investment management business, entered the UK early last year, shortly after taking over Polcom, a Polish modular construction company which owns three factories in Poland. The deal allowed VBC to combine the experience in timber modular solutions in the US with Polcom's steel-framed modular systems which are well suited to mid and high-rise buildings and have been used by clients such as citizenM, Marriott, Hilton, Intercontinental Hotels, and Whitbread.

VBC has already delivered a number of projects including the 226-room citizenM hotel at London Victoria Station. The firm, which is led by founder and shareholder Vaughan Buckley, delivers the projects fully finished and completely fitted out. ‘Given the huge potential for offsite solutions in the UK and across Europe, we anticipate that pipeline may well generate a need for us to increase manufacturing capacity in addition to our already extensive modular manufacturing facilities in mainland Europe,’ adds Smith.

The firm’s primary objective at the moment is to utilise the factories in Poland to better serve the UK market and expand the business into new segments, Smith explains. ‘While our pipeline has historically been hotels, we now have projects in design for built-to-rent and student accommodation.’ In particular residential – both build-to-rent and affordable housing – is one of the fastest growing segments of the offsite sector, driven by the high cost of private rental in the UK, the shortfall in skilled labour, the lack of affordable housing, as well as changing demographics, comments Smith. ‘We have ambitious expansion plans in this sector particularly in the UK, where the government is supporting Modern Methods of Construction,’ he adds. ‘We are constantly evaluating options to support country-specific requirements including those leading towards net zero solutions.’ Smith claims the group is the fastest growing modular construction business in the world, with plans to reach a $1 bn business by 2028.

Modular construction – basically the process in which a building is constructed off-site in controlled factory conditions – is an equity intensive business, yet production is very efficient due to a standardization of processes. The buildings are manufactured and fitted out as modules in technologically-advanced factories. The modules are then transported and craned into position on site in a matter of days. Compared to traditional in-situ construction, modular building methods require developers to design for offsite at the

outset, which involves specifying technical details including plumbing for example at an earlier stage in the process. Because the building is manufactured at the same time as ground works progressing on site, taking an offsite approach significantly reduces building time for a faster return on investment. Being radically faster than traditional construction, this approach is an effective solution to tackle the housing crisis in the UK, notes Smith.

‘We are facing housing shortages across the globe and the only way to solve these problems is to change how we’re building,’ he says. ‘We are bringing solutions to the UK and European markets that have been proven to reduce build time by up to 50% - leading to more supply and helping to ease demand and drive down housing costs.’

While the UK needs over 300,000 new homes to be built every year, there is still a shortfall of 90,000 homes, Smith adds. ‘There is a critical need to increase the housing stock in high density urban areas and to radically improve the productivity of UK construction. Modular construction can accelerate delivery of residential units to meet this demand.’


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