Are we approaching the golden age of CLT?

11 / 01 / 23 - 8 minute read

What do you visualise when you think of manufactured wooden structures? Are you transported to a warm sauna in the freezing depths of Finland and Iceland? Perhaps hygge-inspired chalets further south in Denmark or next to ski slopes in the Alps? Or even camping huts for more modest holidays in the UK’s natural hotspots?

How about contemporary villas in the Netherlands? Bridges in Canada? Or high-rise towers in Norway?

Thanks to the surge in popularity of cross-laminated timber – or CLT – as a structural material, there is a new reality of what can be built wit

CLT: A history

First developed in the 1990s in Austria and championed by the award-winning forestry researcher Gerhard Schickhofer from the very beginning, the use of CLT is now burgeoning. The global CLT market size was estimated at $944.9m in 2021, $1bn this year and is forecast to reach $3bn by 2030.

Already popular in Europe and Canada, the US – more au fait with its favoured stick-frame construction (popular for being cheap and plentiful) – has proven a tougher nut to crack. But that could be changing with more states changing legislation in favour of the material.

We could be entering the golden age of CLT.

So, what exactly is CLT? It is created by glueing layers of trimmed and kiln-dried lumber boards crosswise. Matching and, in some cases, exceeding the performance of concrete and steel, CLT has been dubbed the concrete of the future.

CLT holds several advantages over traditional construction materials. It has a shorter construction period (by six months on average), is cheaper to manufacture due to its prefabricated method, is lighter and more durable than concrete and has a better thermal performance. Its strong sustainability credentials – lower CO2 emissions and energy usage than traditional construction materials – are particularly appealing. 1m3 spruce wood absorbs 622kg CO2 whereas 1m3 concrete emits 300kg CO2.

A decarbonisation solution

With the global megatrend of decarbonisation only gathering pace, underpinned by social and political drivers, CLT offers solutions that few alternatives can. Still in its infancy in terms of widespread adoption, more ambitious CLT projects have started to take shape.

Already constructed are the world’s tallest timber tower in Norway – the 85.4m high Mjøstårnet building in Brumunddal - and the award-winning 160m long Mistissini Bridge in Canada, as well as schools, residential buildings and offices all over the world.

As for the villas in the Netherlands mentioned earlier, this refers to PATRIZIA’s first CLT project in the country, and first ever CLT project for the company – the Hof van Duurzaamheid – or Court of Sustainability in English. Fully let and completed in October 2022, the project includes 40 family houses and 7 urban villas constructed with CLT.

Not only is it PATRIZIA’s maiden CLT venture in the country, but it is also the first housing project in the Netherlands to use this method.

‘A major milestone’

“I would say this project is a major milestone in achieving PATRIZIA’s net zero carbon strategy,” says Guido Maarsman, a PATRIZIA Associate in Asset Management, who led the project. “It’s beautiful searching for new ways to achieve carbon neutrality.”

In addition to the 47 CLT buildings, there are 63 apartments in the complex constructed using more traditional building materials, providing PATRIZIA with comparative data that will inform its potential future use of CLT in other projects. The development will help answer key financial, operational and tenant experience questions surrounding this relatively new construction method.

From a financial perspective, are construction costs and rental values lower or higher than traditionally constructed buildings? Operationally, are CLT buildings more costly to maintain? And do CLT residences generate greater tenant satisfaction?

In terms of operating expense (opex) and capital expenditure (capex), initially, this has been lower than comparable projects. However, this may need addressing in the future, with PATRIZIA carefully monitoring this against other residential schemes on a daily basis.

Guido Maarsman

Emile Poort

‘App-y tenants

To enhance tenant satisfaction, a community app has been created where residents can message their landlords and/or property manager with any concerns or questions they have. Through the app, water and energy consumption can be monitored too.

The tenant question mark is critical to the future use of CLT in residential buildings. With so little data captured on tenant satisfaction, only through pioneering projects like Hof van Duurzaamheid can such feedback be recorded and inform companies about the likely demand for living in timber buildings and the positives and negatives of occupying one of these homes.

“That’s an interesting social aspect to the development,” PATRIZIA Country Head for the Netherlands, Emile Poort, comments. “I like the app idea. By introducing this to the tenants, they understand that the development is special.”

Buy-in to CLT from tenants is essential, with more instructions given to maintain the liveability of their homes. Tenants are not allowed to paint or drill into the walls and smoking indoors is prohibited. Tolerance for the smell of wood is another, albeit smaller, consideration. Surely these rules are a small price to pay for living in such a sustainable setting?

Emile agrees: “I think one of the major wins for tenants is the combination of less energy consumption and living in a really pleasant environment. Tenant satisfaction is extremely important. We are confident about this.”

‘A happy accident’

What enticed PATRIZIA into its dalliance with CLT? Far from driving the investment rationale, the project rather happened to have this extra USP, as Emile explains: “We were not looking for this. We were looking for good residential opportunities across the Benelux and this happened to be one of those good opportunities.

“It was a happy accident [that a substantial part of the complex was constructed with CLT]. In hindsight, we were extremely lucky to have this opportunity.”

Instead, market fundamentals drove the early interest from the PATRIZIA side, with the plot being one of the few remaining assets in a very urbanised area of Amersfoort – a centrally located, historical city 30 minutes from Amsterdam and not far from Utrecht. There is a tight housing market in the city and the population is expected to grow from 158,000 in 2021 to 200,000 by 2050.

As with any first experience, the project proved a development opportunity for PATRIZIA and its project partners. “We then started looking more into CLT,” Emile reflects. “What was it? We looked into the advantages and disadvantages of it.

“It was an extreme learning curve for us to get to grips with CLT. Is it the same or different from usual materials? Then there are the steps after that. How will the wood survive in future years? How will tenants behave with a live material? These were the question marks.”

Rather than baulk at the idea of backing an ambitious maiden project, with all the associated risks this entails, investors backed the team to succeed and realise the many benefits that CLT provides. “The risk is on our shoulders,” Emile states. “It has been delivered now. I spoke to the construction company and developer and it’s clear that it was a rite of passage for all of us.

“It has gained a lot of attention in the press and from investors and brokers. We are proud to own and manage it.”

A faster solution for delivering more homes

So far, the early indications are positive. “We’ve had no major issues with CLT in the development period,” Guido shares. “The experience of building with the material was excellent. Because it’s prefabricated, it’s a very quick process. It contributes to a clean construction site and working with CLT is less intensive for the construction workers. . It’s all made in a warehouse and transported to the site, and it is also consistent with many ESG considerations.”

The reduced building timeframe with CLT is a significant advantage, according to Emile, who sees great potential in the timber structure to help solve the demand for homes.

“CLT reduces the time needed to build by 30%, which is enormous,” he says. “It took 18 months to build when it would normally be 2-3 years. That is a big advantage in terms of financing the projects as it generates quicker returns for investors. The longer it takes, the worse your returns.

“Looking across Europe and in the Netherlands, there’s a huge problem in terms of housing. In the Netherlands, there are 18 million people with a need for 400,000 extra homes. Going forward, this figure rises to 900,000. CLT substantially reduces building durations and helps create a better world from an ESG perspective. It’s a win-win situation.

“Lots of developers and construction companies are looking more into the structure and it will be rolled out on a much larger scale if it works. It will help the demand/supply problem in the Netherlands.”

The decarbonisation benefits have been demonstrable at Hof van Duurzaamheid, with the use of CLT in the development compensating for nearly 1.68 million kilograms of carbon emissions had traditional materials been used.

Sustainable forestry and CLT

The wood used in Hof van Duurzaamheid derives from sustainably managed forests. “The wood comes from a specially created forest which works on a 10-year cycle of planting and cutting down,” explains Guido. “It’s not coming from existing forests and harming those environments. The vendor has its own forest. In this way, they’re able to measure their carbon emissions.”

The approach used, therefore, addresses the main concern about CLT which is its adverse impact on forests. Whilst a more environmentally friendly material to use than concrete and steel, the use of timber would lose its appeal if it were to come at the expense of vast swathes of forests.

Other considerations for CLT usage are the discolouration of the wood and the material expanding and shrinking by a few centimetres in different weather conditions. The expansion and shrinkage of the timber must be accounted for in the design stage. Neither of these drawbacks would appear substantial enough to halt widespread adoption of CLT.

Combine CLT with sustainable forestry and, moving forward, wooden buildings could be less the exception and more the rule.