Originally posted on REI-INK.COM
by Carole VanSickle Ellis
When Brian Iagnemma, President and CEO of Broadstreet Homes, tells you that his business “builds everything twice,” it might not sound like the epitome of efficiency. Keep listening, however, and you will discover that this unique build-to-rent design process truly trims the budget and keeps mammoth projects on track.
“The heartbeat of our business is our 3-D BIM technology, which enables us to build everything virtually first, work through any inefficiencies, and then actually construct the project,” Iagnemma explained. Using the BIM software enables investors and builders to examine a structure digitally throughout future construction phases prior to fabricating the components of a building. This “crystal ball” angle saves time and money because adjustments are made prior to physical building. “Because we are a residential home-building firm, we have a huge responsibility to get our projects done with speed and cost-efficiency. We can’t afford to trip over schedules and budgets,” Iagnemma added.
Broadstreet’s access to that 3-dimensional modeling (BIM) software is the result of a strategic partnership with Synergy Steel, a manufacturer and turnkey framing provider of steel panelization serving the residential, multifamily, and commercial construction industries. BIM technology enables Broadstreet Homes with the ability to digitally lay out an entire home, working through “kinks” from every angle before the framework ever goes up.
“It’s kind of like a big kid’s erector set by the time everything gets to the site,” Iagnemma said. “When a wall panel leaves our factory, it has everything. We know where every stud is located; the plumbers and electricians never have to drill because it is all prepped and the holes are punched, and we have paths for the ductwork in place.” Using the BIM software, project managers can clearly predict “to the inch,” as Iagnemma proudly pointed out, the amount of electrical wire, sheathing, sheetrock, and other materials needed.
“It can be intimidating technology, but it saves thousands of dollars in materials and labor,” he added. “We have been so proud to bring this technology to residential construction.”
The “Secret” Behind Residential Steel Construction
Although steel has been used for construction purposes since the late 1800s in the framing of train stations and, in the 20th century, skyscrapers, it has largely remained a commercial construction material until fairly recently. Prior to World War II, steel was expensive to obtain and used primarily for military purposes and oil storage. After WWII, the metal became more available, and famously was used as the primary construction element in the Empire State Building.
Today, steel is commonly used in many components of residential buildings, such as the foundations, HVAC, electrical panels, and hardware and brackets. However, when it comes to framing, most residential builders still prefer to rely primarily on wood options. This has contributed to the rising cost of housing in the United States as lumber prices soared in recent years and often delays single-family home starts in particular. In fact, lumber prices doubled this past February over just three months prior and, in conjunction, single-family home starts fell 12 percent during the same period of time.
When utilizing light-gauge, structural steel, however, cost and construction time frames may be dramatically reduced, Iagnemma pointed out. This is due in large part to the company’s ability to fabricate many structural components off-site, sheltered from the elements and weather-related delays in a warehouse or factory setting. Thanks to Broadstreet’s digital element, all of the review and optimization processes and procedures are handled prior to fabrication. The resulting comparisons are stark.
“For a 2,000-square-foot home, our team takes roughly 2.5 days from the time we start framing until we walk off the job site,” Iagnemma said. By comparison, he said, “a really good wood framing crew” will take four or five days for the same project. “And, on top of that, insurance savings [on steel construction] tend to be a minimum of 18 percent,” he noted gleefully. After all, steel is noncombustible, and therefore usually far less expensive to insure for the builder, the investor-owner, and any operators involved in management of the property. Steel is also impervious to mold and termites, and results in less maintenance and service which drastically has an effect on an investor’s ROI.
Iagnemma is very clear on one point, however: There is still a place for wood in the single-family sector. “We were in the wood business for many years before we made the transition to steel,” he said. “For us, though, being willing and able to dedicate a substantial portion of our budget to research and development into the BIM software and steel fabrication technology meant that we knew we would be able to build faster and more efficiently. It was impossible to ignore the benefits of making the transition.”
A Family Passion Project Coming to Fruition
It may have ultimately been impossible to ignore the benefits of single-family steel construction, but Iagnemma was not an immediate convert to the family passion project. In fact, he was highly skeptical of the Broadstreet Homes transition from wood framing to light-gauge steel at first.
“I can take absolutely no credit for it,” he said, explaining that his brother, Michael Iagnemma, founded Broadstreet Homes and had the initial idea to transition into steel construction. “Michael has a lot more experience in wood framing and the wood panelization business,” Iagnemma said. “When he suggested making the change, I was working for a large, national builder. My immediate reaction was, ‘That sounds pretty good. How much more expensive will it be?’”
Upon learning his brother planned to do all the manufacturing in-house, thereby making the entire process far less expensive than continuing to use wood, Iagnemma was in. “Quite honestly, I thought he was nuts. But we took that leap of faith, converted from wood to steel, and moved into the manufacturing and installation business as well,” he recalled. The move, which created a strategic partnership with Synergy Steel, a leading manufacturer and turnkey framing provider of steel panelization across multiple construction sectors co-founded by the brothers, proved to be the right one.
Today, as the market for construction materials grows increasingly competitive, Broadstreet Homes is uniquely positioned not just to save its investors time and money via efficiency strategies; the company also enviably holds a contract allocation of steel that guarantees a steady supply of the metal at a highly competitive price. In fact, Iagnemma said, companies in other industries frequently contact the company about purchasing part of the annual allocation.
“We are very fortunate. We purchase more steel than anyone else in the country [in our sector], and we are very proud that it is all domestic steel,” he said. Perhaps even more reassuring to investors eying home-start metrics and wondering how their single-family projects will fare in 2021, Synergy and Broadstreet also have additional resources available should they find themselves in need of more building materials.
Always Seeking the Right Fit
Just as Broadstreet Homes sends out its steel panels ready for a seamless fit on the job site, the company demands a seamless fit among its team members and clients as well. This, Iagnemma believes, is the secret to the company’s ongoing growth and productivity. “There are no egos in this organization,” he explained. “Our folks that arrive at 4:30 a.m. to work on the factory floor will team up with our executive team to move trusses onto a truck if that is what needs to be done. We are a family, and that is how we have operated since the beginning.”
This requirement that everyone in the business operate as a team and accept some basic principles, such as that shortcuts will usually backfire and cost the business and investors more in the long run, extends to Broadstreet Homes clients as well. “Our culture revolves around giving our employees, our leadership team, and our trade partners the tools they need to be successful and then getting out of the way,” Iagnemma said. “It is amazing what people will accomplish with the right tools.” Using the right tools often means being willing to work with the Broadstreet Homes team throughout the digital design process all the way through to the exit strategy and long-term goals.
“Just because you have a lot of money does not automatically mean you will be successful,” warned Iagnemma. “We provide strategic partnership, but that is not what everyone is looking for. We require our investors to have a defined business plan and specific goals that we can work with them to achieve.”
For potential investors in a marketplace rife with “FOMO” and a compelling message to hurry and get homes up, Broadstreet Homes can represent the attention to detail and refusal to compromise on quality that may be missing in many construction projects. “We find our company classified in the builder category, but we bring an entire value chain from design, engineering, manufacturing, and installation,” Iagnemma said. “We are not just another builder. We offer so much more.”
Broadstreet Homes 2021 Outlook: How to Succeed in Build-to-Rent This Year and Beyond
When Brian Iagnemma thinks about the next 12 months, he sees two things: huge potential and pending pitfalls. Fortunately, he said, Broadstreet Homes is equipped to handle both.
“I see a lot of choppiness in the market over the next 12 months,” Iagnemma warned. “There is a tremendous demand for build-to-rent. It’s a very logical sector in which to place capital right now.” He cited a basic lack of traditionally viable alternatives, such as retail and commercial development, and skyrocketing home prices in the single-family residential sector. However, he added, major supply chains are experiencing shortages and delays, and land is also demanding a rising premium.
“The land is getting gobbled up at a rate I never before seen in my career,” Iagnemma observed. “When you factor in all these things, there is a big gap between the surplus of capital that is out there and the supply of projects in which to put it. That is what is attracting investors to the build-to-rent space.” Iagnemma remains bullish on build-to-rent, but warned that both investors who are new to the space and more experienced, traditional builders will likely meet “a lot of resistance” when they start to scale their businesses and projects.
“They’re not going to be able to scale as fast as they expected or would like because there is such a lack of supply,” he said. “That is where working with a company like Broadstreet Homes that has experience in lumber alternatives, a reliable supply chain, a healthy land pipeline and an expedited construction timeline can really change your 2021 outlook for the better.”
In preparation for 2021, Broadstreet Homes has been scaling and expanding its own business as well. “Under the leadership of EVP, Michael Emanuel, we have built our Syntech design and engineering team from a group of two to a group of 15,” Iagnemma said. The strategic partnership with Synergy Steel is also bolstering the company’s confidence in its ability to design and deliver in 2021. The company recently debuted a portfolio of light-gauge steel, single-family detached and town-home house kits to further expedite building projects and maximize returns for clients. “These kits are already designed and engineered for all 50 states and ready for immediate purchase and delivery,” Iagnemma said. “Think of these house kits as the 2021 version of the Sears & Roebuck catalog of homes.” The designs have been simplified in order to make installation a matter of just two or three days in many cases, but they can be revised based on individual clients’ designs and vision. In some cases, Iagnemma said, a client might even request a house kit designed from scratch. He added, “We are excited to roll out this program, especially during a time of such constrained supply chain. We are in an ideal situation because of being able to leverage both the businesses together, and we are ready to take on the right clients, investors, and projects in this competitive and complicated market.”
Learn more about the Synergy Steel/Broadstreet Homes partnership and the new line of home kits at SynergySteelCorp.com.
Why Now? How & Why Steel is Moving Into Residential Construction
Light-gauge steel has been used in the framing of commercial buildings for years. Historically, builders found it easy to justify the extra costs associated with the purchase of steel (vs. wood) because high-rise buildings particularly benefit from fire-resistance, strong and resilient metal construction, and the near-permanent characteristics of the metal. However, the single-family residential construction industry did not embrace steel as a framing option until recently when a variety of factors combined to create a perfect storm in the lumber industry and push steel to the forefront of the supply-chain conversation.
“Functionally, the cost of…steel has always been competitive with wood,” observed Steel Framing Industry Association (SFIA) executive director Larry Williams last fall, around the time lumber prices had skyrocketed 130 percent over April 2020 levels. “Right now, builders can get the quality and superior performance of steel and a huge savings on framing their projects,” he added. At that time, Williams predicted wood framing shortages would ultimately “blow away the labor cost differential of wood and steel for building single-family houses.” By the start of 2021, it was beginning to appear he was correct.
Naturally, the cost benefits currently associated with steel framing are a significant consideration for developers, but the metal brings other advantages to the table as well. Steel structures tend to be more weather-resistant than wood structures, and steel is stronger, pound-for-pound, than any other building material. This strength permits greater architectural flexibility. Finally, steel buildings are generally considered to be “greener” than wood buildings, which is becoming increasingly important to homeowners and residents spending more time than ever at home. Not only do today’s modern steel mills produce steel containing, on average, 90 percent recycled materials, but steel goes through fewer chemical treatments than lumber (in most cases) and does not emit volatile organic compounds (VOCs). Wood can emit VOCs, and some VOCs are classified as toxic health hazards or environmental risk factors.