Cost of lumber leads Silicon Valley builders to embrace new tech

The cost of lumber skyrocketed during the pandemic, but local builders say things are looking up.

“It’s still above (the) norm, but it’s coming back down,” said Russell White, general manager of Lendlease America’s design-build division. “We expect the volatility to come back within normal constraints.”

The price of lumber is $756 per thousand board foot as of July 2, according to MarketWatch. A board foot is one foot long and one foot wide, with one inch of depth.

Lumber prices have historically hovered below $500 per thousand board foot. But prices rose dramatically in August 2020, peaking at a price of $1,670 per thousand board foot on May 2 of this year. Rising construction costs, including materials, play a major role in developers’ ability to break ground on critically-needed housing projects in San Jose.

In construction projects, lumber is used in a variety of ways, particularly in multi-family residential buildings. Softwood lumber is used in wall frames and scaffolding, and is also used as framing for concrete pours.

The use of lumber at various points of construction makes its high price an important factor in development projects, according to White.

“That’s had a significant effect on the multi-family industry here in San Jose,” White said, adding that lumber has had the most volatility of any raw construction material this last year.

Geoffrey Morgan, president and CEO of affordable housing developer First Community Housing, said residential builders have to build denser housing to make projects financially feasible. This higher density results in taller buildings that use a lot of wood.

“Right now, wood frame construction is getting very expensive, because as COVID has started to end… there’s been a shortage of people,” Morgan told San José Spotlight. “We kept building, but the problem is, as you look at new projects, we’re starting to see massive increases in lumber prices.”

Morgan said a concrete and steel-based building is expensive, unless the building owners decide to charge high rents. So his company looked at other solutions, including new building technologies such as modular construction and mass timber.

Mass timber is a pre-fabricated construction system that uses wood cut into modules for denser building projects, according to Thang Do, CEO of San Jose-based Aedis Architects.

“It’s wood, but it’s manufactured by a whole different supply chain than the lumber mills,” Do said. “In the long term, there should be a lot of advantage to using mass timber… the material cost is a factor, but it (also) cuts down on on-site labor and labor overall in a significant way.”

California adopted new building code specifications this month that allow developers to erect buildings as high as 18 stories using mass timber, according to a report from AIA Los Angeles.

Do said the use of mass timber will reduce the weight and lateral resistance of taller buildings, lowering the amount of concrete needed for each building’s foundation, which will further reduce costs.

“You can build eight stories of wood using all mass timber,” Do said. “You don’t have to mix concrete with wood, or you can use a lot less concrete than you would.”

A new senior housing complex planned for the southwest corner of Gifford Avenue and San Carlos Street in San Jose will be the first permitted eight-story mass timber building erected in the Bay Area, according to Do. The complex, to be built by Urban Catalyst, will feature 117 housing units within walking distance of Diridon Station.

Another project near Diridon, to be built by First Community Housing and Lendlease and designed by SERA Architects, will use mass timber framing. The building will be 12 stories high and feature 365 units of affordable housing.

Industry experts say the potential to lower construction costs is what’s driving developers toward new technologies such as mass timber. Morgan said the use of mass timber saved First Community Housing a lot of money.

“It’s a new technology, so there are risks… but it’s becoming more and more accepted,” Morgan said. “Globally speaking, the reason we’re exploring these new technologies is because of cost.”

Editor’s Note: A previous version of this story had an incorrect number of units for the project by First Community Housing, Lendlease and SERA Architects.

Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.