Mass Timber + Hospitality: The Developer Perspective
The use of mass timber construction is gaining momentum in the US; however, its aesthetic, construction, and sustainability advantages remain largely unexplored for hotels. Our multi-disciplinary team has begun exploring the construction of hotels with mass timber by examining the potential advantages and challenges that would be encountered in envisioning and bringing to market a mass timber hotel. This blog series looks at a realistic, hypothetical mass timber hotel through the point of view of the developer, the design & construction team, the operator, and the guest.
I always get a little nervous before I meet with loan officers. We’ve done several developments, and our company has a strong track record and good relationship with our lender. But something about loan officers puts me on edge. To prepare, we always place extra focus on the due diligence documentation for the bank. We have a well documented pro-forma, site purchase ready to go, site test fit, initial design, contractor quote, environmental report, our financials… the stack of information they always ask for is all there.
However, this hotel we’re developing is different than others we have done before. It’s a mass timber building.
I recently toured a mass timber office building a colleague developed. I had seen a few buildings like this in Europe, but this was the first I encountered in the US. It looked fantastic —all the exposed wood made it feel warm and comfortable. And apparently tenants loved it — it was 100% leased before opening.
Mass Timber priced out about 5% higher than concrete construction, but would allow us to get to market 20% faster — offsetting the additional construction cost.
We did some initial research and met with the design team and contractor that had designed and built the mass timber office project to help us analyze cost implications. We were looking at three potential projects at the time that were each very different in scale and construction type. We found that our proposed nine-story hotel was the best fit from a cost perspective. Mass timber priced out about 5% higher than concrete construction, but would allow us to get to market 20% faster — offsetting the additional construction cost. The structure itself — which is inherently beautiful — could be used as the finish material so much of the interior finish work could be simplified. The advantages began to stack up.
However, the development team and investors still had a lot of concerns. The additional cost neutralization is tied to speed of construction. How could we minimize the risks? What were the supply chain issues? Was there skilled labor familiar with the construction type? Would it be difficult to get a building permit? What about safety and insurance costs?
To address concerns and mitigate, we spoke to local manufactures to evaluate capacity. We organized the design schedule so that procurement decisions would be made by the end of Design Development, allowing the construction documents and timber shop drawings to be made simultaneously.
We discussed labor issues with the contractor. They verified that there were multiple sub-contractors that could do the work and that mass timber elements are generally installed by carpenters who can execute the work with a small amount of additional training.
We spoke to the jurisdiction. They already have another mass timber building being permitted so their systems for permitting and inspections are already in place.
We also met with our insurance company and discussed the construction type. Our consultants walked them through the properties and code considerations that give mass timber buildings equal safety considerations in relation to other construction types and how they can potentially be more resilient in a seismic event. After some education and negotiation, they have agreed there will be no premium for the mass timber construction.
In the end, after all of our research, pricing and debate, the development team and investors were in in unanimous agreement that the project should move forward as mass timber. Our due diligence on this is thorough and I’m ready to answer any questions the loan officers may have.
Gary Golla is a Principal at SERA, with 27 years of experience covering a wide range of building types and scale of projects— with a focus on hospitality design. His experience includes 15 hotels with more than 3,000 built guest rooms; ranging from a 50-room ski resort to a 900-room Convention Center hotel.
The Mass Timber + Hospitality research team includes:
Josh Cabot, SERA
Gary Golla, SERA
Chad Chalupsky, Fulcrum
Mitch Lund, Fulcrum
Tom Kostelecky, Marriott International
Jack McCutcheon, KPFF
Erica Spiritos, Swinerton Mass Timber