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Timber construction is experiencing a significant boom in Germany. Despite challenging conditions, the national timber construction rate increased last year. While the number of approved residential building permits dropped country-wide steeply by 38.6 percent in 2023, the percentage of new timber buildings rose to 22 percent of the residential and 23.4 percent of the non-residential total.¹ The outlook for timber construction has rarely been as positive as it is now. This is due not only to internal industry developments, predominantly by external factors. It is crucial to respond appropriately to these changing conditions to harness their potential.

Rising demands on the construction industry

Several trends are encouraging the use of timber in construction. A significant driver is demographic change. the forecasted population growth and the aging society are expected to significantly increase the demand for housing and infrastructure over the coming decades. By 2035, Germany will require around 219,000 new apartments annually.² Cities will be especially affected, where 84 percent of the country’ population is expected to live by 2050. This will exacerbate an already tight housing situation and require new technical solutions for densification, such as adding new stories and building “micro-living” apartments with shared facilities and community space.³ Additionally, the importance of sustainable products and supply chains is growing significantly. Demands for low carbon footprints, more circularity, and positive ESG (Environmental, Social, and Governance) ratings are notably impacting competition in the construction sector. This can be seen in the exponential growth in sustainability certifications (DGNB), which surged by around 550 percent between 2015 and 2020.⁴

Timber construction as a solution?

Driven by these trends, demands on the construction industry are changing: the future will require building more, faster, more flexibly, more sustainably, and more cost-effectively. Timber appears to be perfectly suited to meet these requirements. As a renewable resource, it is easy to work with, pre-process, dismantle, and use flexibly. But can companies in the timber construction industry meet these demands?

The current challenges in the timber construction sector are multifaceted: a strong focus on specialized expertise in conjunction with a shortage of skilled workers. Added to this is the tendency toward silo mentalities: timber construction and the construction industry overall are traditionally conservative. The value chain follows clear rules established over decades — with little coordination among the different trades involved. However, the biggest issue lies in their one-off approach. Each construction project is delivered on an “engineer to order” basis, leading to inefficiencies and delays- in other words, specialists with limited capabilities. This conflicts with market demands, and is aggravated by external challenges like increasing project complexity, material shortages, and supply constraints. The existing system is no longer economically viable for the industry.

Breaking new ground

A new approach known as “configure to order” could be the solution. Pre-conceived and pre-developed components are adapted to each individual project. Where no standard solution exists, it is supplemented within a known solution space. Production takes place off-site, based on standardized components that are quickly assembled on-site. This significantly reduces disruptions due to lack of synchronization, missing materials, and lengthy construction processes.. Buildings are no longer “built” but rather produced and assembled.

This approach requires a new way of thinking —from unique one-off projects and toward standardized prefabricated solutions , creating a scalable and productive system. Buildings are designed in collaboration with production engineers, logisticians, and on-site project managers to optimize pre-assembly in the factory, transport to the site, and the building’s assembly.. The entire process needs to be conceived from end to end, i.e., from order to hand-over— moving away from siloed thinking towards an integrative model with new roles and rules for collaboration.

Concrete construction points the way

Looking at precast concrete construction shows that a similar approach already works, albeit without the flexibility and sustainability offered by timber construction. This is where the great opportunity for timber construction lies: timber as a material meets the requirements for sustainability and flexibility excellently. Through a new value chain, the timber construction sector can significantly improve its capabilities to deliver faster, cheaper, and more. It is the only way to meet rising demands and fully utilize the potential of this future-oriented approach to construction.

This article was originally published in Heuer Dialog.