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An expensive materials market is making one of construction’s less conventional alternatives worth another look.
Steel prices have risen 25% over the past year, Tom Park, Skanska’s vice president of strategic supply chain, said during a September 10 webinar on material costs. Delivery times, on the other hand, have more than doubled to 55 weeks.
Blame the price jump in the rush to build data centers and semiconductor plants, Park said.
“Very strong demand for steel and other metals due to AI deployment,” he said. “Currently, both steel mills and steel manufacturers are operating at full capacity.”
the demand, together with the feesit means contractors are now looking at solid wood as a way to avoid those logistical bottlenecks, said Dean Lewis, director of solid wood and prefabrication at Skanska.
“We’ve seen a lot of interest,” Lewis said when asked about demand from data center customers during the webinar. “Customers are interested in alternative materials given the overall supply chain strain on all materials.”
Solid wood, however, is more expensive than steel up front. The wood frame itself costs more, Lewis said, but the savings could start to show up over the course of a project.
For example, Skanska studied a three-story office project where the timber gravity frame cost more than its steel counterpart. Savings in the foundation, siding, finishes, facade and construction schedule ultimately brought the two options close to cost neutral.
“[Mass timber] it’s a lighter structure, so you can have reductions in the foundation, reductions in the side and then the MEP, if it’s integrated efficiently, it really shouldn’t have any cost impacts,” Lewis said. “There should be savings on the interiors. Obviously, because of its prefabricated nature, solid wood lends itself to an improved schedule, so there are potential savings.”
Wood costs show stability
Despite the tariff pressure on Canadian softwood lumber, the escalation in lumber prices is between 0% and 3%, Park said.
“The big story in the news has been the trade war with Canadawhich is important because approximately 25% of softwood lumber consumed in the United States comes from Canada,” said Park. “Although softwood lumber is under tariff pressure, low demand in the residential housing market has kept lead times low.”
Lumber accounts for about 65% to 70% of bulk timber input costs, said François Robichaud, wood products and construction market intelligence partner at Forest Economic Advisors.
“While we’ve seen the steel side of the equation see a sharp increase in prices, solid wood has proven to be much more stable of late,” Robichaud said during the webinar. “It should stay that way for the foreseeable future.”
In addition, the manufacturing capacity of cross-laminated timber and glulam has expanded significantly over the past decade, but actual production is still below full capacity, he added. That means U.S. producers should have no problem meeting future demand, according to Robichaud.
The limitations to the mass adoption of wood
There are still headwinds to solid wood expansion, in addition to higher upfront costs.
Builders risk insurance is higher for the solid wood option compared to steel. Skanska is working with the Department of Agriculture on a study of strategies to help lower those insurance premiums, but Lewis expects the research to take a year and a half to two years.
A bigger limitation occurs before manufacturing begins, Lewis said, because design and coordination often determine how quickly contractors get material to the job site.
For example, on a recent project, Skanska moved quickly, in about three weeks, from contract execution to on-site wood. However, other projects that required crews to coordinate penetrations through cross-laminated timber and glulam took four to five months, Lewis said.
“The design and coordination time is really the lead time,” Lewis said. “The lead time doesn’t really depend on the actual manufacturing timeline.”
The alternative solution is for contractors and owners to agree on structural decisions as soon as possible.
Wood up front versus pivoting up later
While projects initially geared toward steel or concrete can be converted to solid wood, they risk losing some of the cost efficiencies, Lewis said.
“We see some teams sometimes where they come in and want to take a design that’s steel or concrete and turn it into wood, which can be done, and we can help with that, but we definitely need the design with wood in mind. It’s going to have its own grid design again,” Lewis said. “So if you’re not designing like that, early and with the wood in mind, that can be difficult.”
Along with structural decisions, contractors must also coordinate with the mechanical, electrical, plumbing, and fire protection trades so that wood components arrive on the jobsite pre-fabricated.
“There’s going to be a more upfront and conservative effort in planning when it comes to solid wood,” Lewis said. “There will also be deposits that will be called for sooner.”
