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Tech Company Katerra Sets to Disrupt Construction Industry

MODULAR AND PREFAB CONSTRUCTION HAS COME A LONG WAY, BUT EVEN THE MOST CUTTING-EDGE COMPANIES IN THE INDUSTRY STILL HAVE AN “AIR” PROBLEM. Preassembled factory-made structures have large volumes of air inside them, and thus transporting them from factory to site is clunky and limited to the size of the truck or railcar that can carry them. Clearing the air, as it were, is one part of what three-year-old technology company Katerra hopes to do in its remaking of the often-wasteful construction industry.

The Menlo Park, California–based firm, whose cofounder, Michael Marks, was interim CEO of Tesla for a time in 2007, has thrown its hat into the disruptor ring with an $865 million Series D funding round that stunned the construction and VC worlds this past February. Katerra, unlike consumer-facing companies such as Uber and Airbnb, has set its sights on the more mundane but lucrative market of developers and construction companies. If Katerra can fully scale up its model—which compresses the multiple steps inherent to most construction projects by owning its supply chain and production processes from start to finish—the company stands to become the ultimate global construction machine.

With vertically integrated teams, the crux of Katerra’s innovation is its control of design, engineering, supply chain, offsite manufacturing, and its LEGO-like onsite assembly, which—if all fully realized—will permit swifter and more economical building strategies. Usually, a construction project requires several firms plus contractors and subcontractors, each of which undertakes a different task. Katerra wants to streamline and downsize building teams by creating kits of component parts (including floor and wall panels, fixtures, and hardware) that can be flat-packed or transported partially complete from factory to job site. The company’s system aims to control both material waste and the wasted time that results when frictions or miscommunications arise within large project teams. Katerra, whose company mission is distilled in its motto, “Better, Faster, Cheaper,” is for now focusing on multifamily, senior, and student housing, plus hospitality, with an emphasis on developing mass-timber construction.

The question is, what value do we, as architects, bring to society? Corbusier, Mies, Frank Lloyd Wright—they were agents of change. The more that design remains decorative, the less importance we architects will have. We’ll be seen as wallpaper.”

-Michael Green, Architect

The approach is already bearing fruit: Katerra currently has $3.7 billion in signed construction projects on its slate, including the 150,000-square-foot Catalyst building in Spokane, Washington, and a hospitality center on the Kootenai Health campus in Coeur d’Alene, Idaho, that will provide low and no-cost lodging for patients and their families. Both will be built with cross-laminated timber (CLT), the sustainable wünder-material that’s touted by progressive architecture firms as the next big thing but isn’t yet widely deployed in North America. Katerra plans to change that, too, by becoming the first company to manufacture CLT on a large scale; last year, it announced that in fall 2018 it will open a 250,000-square-foot factory in Spokane that will produce 180,000 cubic meters of CLT annually, making it the largest-capacity producer of the material in the United States.

“As architects, we try to create beautiful buildings that people will love and appreciate. At Katerra, none of that changes,” says Craig Curtis, the company’s head of architecture. “We’re applying lessons from the way almost everything else is made—streamlining manufacturing; using robotics and precise equipment—to produce assemblies and components that can be put together in the field.” Curtis, who was at Seattle’s Miller Hull for 30 years, 20 of them as a partner, works out of Katerra’s West Coast design headquarters, which opened in Seattle in January 2016 and now employs 170 people, including architects, designers, and product specialists. Katerra’s head-spinning growth has lured many local creatives and engineers away from their old roosts, and Curtis explains the attraction this way: “There’s an excitement around changing the way architects deliver projects. Once people really understand what we’re doing, they realize we’re not compromising design. It’s just a more efficient way to deliver high design, which gives architects time to work on things that really matter.”

To further close the gap between its mission and its method, Katerra has acquired other design firms; at the end of May 2018, it announced its acquisition of Vancouver-based Michael Green Architecture. MGA’s founder, CLT titan Michael Green, previously served on Katerra’s advisory design and architecture consortium. A longtime champion of sustainability, Green is not shy in his critique of the construction industry’s environmental and process deficiencies and the old ruts in which the design industry often finds itself stuck. “I draw a building in a nice office at my computer, and then people go out in the pouring rain and put it together with hammers,” he says. “It’s a slow and messy process, and there’s a lot of waste—our landfills are full of construction waste. We haven’t gotten better or faster.” As an economic partner, he’ll continue independent work on MGA projects while benefiting from access to Katerra’s materials and methods. In return, Katerra will benefit from Green’s design guidance and his CLT expertise. “CLT hasn’t been as affordable as it should be because there hasn’t been enough competition in the market,” Green says, but the Spokane factory just might alter that picture.

It’s easy to picture Katerra as an office full of 21st-century Howard Roarks, all obsessed with efficiency and pragmatism. But the obsession with precision may be a tonic in the construction industry unused to innovation. Peter Wolff, the firm’s VP of design, says Katerra’s concept of the built environment is “yacht-like,” meaning that built-ins and integrated elements are key, and no square inch is dead space. “A Katerra building is like ordering a car,” he explains. “With a brand like BMW, you [the consumer] choose options within a framework. Then the car is built in the factory, with all of the same quality and design language.” Katerra, he says, will model similar value and efficacy.

Green offers this summary of the firm’s aims: “I believe that the significant cost savings found in rethinking buildings’ delivery model is a positive pressure to improve design and construction everywhere. I don’t think Katerra threatens those designing at the top of their game, but I think it will force those who are not to pull up their socks.”


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