INDUSTRIAL POLICY FOR SCALING OFFSITE HOUSING CONSTRUCTION IN THE UNITED STATES: INDUSTRY BARRIERS AND POLICY RESPONSES IN STATE AND LOCAL INITIATIVES

Abstract

Offsite construction, a set of construction techniques involving offsite prefabrication before onsite building assembly, shows promise as a means of reducing housing construction costs and timelines. Yet the sector accounts for a marginal share of the construction sector in the United States today due to a range of barriers preventing many firms from achieving economic sustainability and efficient project performance. As accelerating construction cost inflation undermines the ability of housing markets to supply enough housing to meet demand, state and local jurisdictions throughout the United States have recently begun pursuing industrial policy efforts to address these barriers and catalyze broader adoption of these techniques. This research identifies patterns in these policy initiatives across each stage of their development, progressing from the barriers that motivate them, to their origins, goals, design, and implementation, and concluding with an analysis of Colorado as an advanced case study with sufficient data to permit tentative policy evaluation. This thesis makes contributions across each stage of the policy cycle. It elaborates on previously understudied barriers to offsite construction and argues that the barriers to the offsite construction form an interconnected system with important policy implications. These include that policy must be mindful of unintended consequences, comprehensive across the many domains of the housing ecosystem in which these barriers exist, and address the vicious cycle between the industry’s reputation and its inability to achieve scale. Regarding the policy initiatives themselves, it identifies five broad categories of policy instruments – demand aggregation, regulatory reform, factory subsidies, workforce development, and knowledge diffusion – and identifies three key challenges that have emerged in several policy efforts: achieving regional coordination, sustaining momentum, and opposition from building trades unions. Finally, it finds that firms supported through Colorado’s policy efforts have yielded cost savings and housing unit production below initial expectations. Though robust causal attribution was prevented by a lack of data, it argues that insufficiently comprehensive regulatory reform and demand aggregation provide significant explanation for these outcomes. This research offers both a conceptual framework for researchers interested in analyzing these nascent initiatives, as well as valuable lessons for practitioners and policymakers interested in pursuing similar efforts.