‘The Sisk Living business model is different to that of a traditional builder-developer’
FERGAL LALOR, Managing Director, Sisk Living, speaks with Barry McCall about current factors affecting the house-building market and why the Sisk Living business model ideally places it to deliver social and affordable homes.
Sisk is one of the best-known names in Irish residential construction. The Sisk company has been building homes and communities for the past five decades, and up until the Covid pandemic, it has been completing some 1,500 residential units every year and making a significant contribution to the state’s social and affordable housing targets in the process. Sisk established Sisk Living over four years ago to focus on low-rise residential projects.
“We have a strong bias towards social and affordable housing,” says Sisk Living managing director Fergal Lalor. “We are a contract builder, and we do not expose ourselves to development risk. Our clients are in the main approved housing bodies, local authorities or private-sector providers of social and affordable housing or private rental sector (PRS). As a contract builder, we are focused on delivering at scale and speed for those clients.”
Bonham Street, Dublin, a Sisk development for Dublin City Council.
Sisk Living business model
“The Sisk Living business model is different to that of a traditional builder-developer,” he explains. “Many companies who self-develop deliver at the pace of market absorption,” Lalor explains. “They will build 20 units at a time or whatever suits. We go in and deliver a scheme at scale, whether that’s 80, 100 or 200 units at a time. We are focused on clients who like that approach. That typically suits local authorities, approved housing bodies, private-sector providers and so on. Once the decision is made to move ahead with a development following the design and planning process and other preparatory elements, they want delivery now. It suits our business model to do that.”
The pipeline of social and affordable housing is improving at present, with greater visibility into the future as well.
“We can see almost 3,000 units in the procurement pipeline at the moment, which we haven’t seen in the past, but as the plan is to build up to 9,000 social and affordable units this year, we still have a way to go,” says Lalor.
“There are a variety of projects being brought to the market, such as the Killinarden and Old White Church Road schemes by South Dublin County Council and Cork City Council, respectively, where the developer of the social, affordable and some cases the private scheme are brought to planning by the economic operator on a licence on state lands,” he adds. “The challenge for a contract builder like ourselves is that when you are waiting for the proverbial bus, they all come along at once.”
Fergal Lalor, Managing Director, Sisk Living.
Housing market trends
There are positive trends in the market as well, with the introduction of a greater mix of tenure types to developments.
“We are seeing a good mix of social, affordable, private, and cost rental,” he notes. “From a planning point of view, it is very important for developments to be tenure blind. You shouldn’t be able to distinguish one type from another. The architecture, materials and layout have to be similar throughout. And we are seeing significant effort going into mixing tenure types.”
And it’s not just a question of numbers.
“You don’t want to end up with one part of a development being exclusively social or private; you want to remove any stigma associated with any tenure type. That’s what we are seeing from a planning point of view now.”
There has also been a move to a healthy mix of housing typologies. Fergal Lalor says Sisk Living is seeing a good mix of three-bed semis, duplexes, low-rise and mid-rise housing.
“In social housing, there is a very concerted effort towards own door access, where you have buildings two, three and four storeys high. Instead of a management company operating lifts and so on, the residents can look after those things themselves.”
The company currently has over 450 units under construction.
“We had a number of live projects prior to the latest shutdown, and we were pleased to see all of our sites open in April. We see industry challenges with both labour and material supply. However, none of these are particularly surprising, and we have been planning our way through dealing with them.”
Modern methods of construction
Sisk Living is a strong advocate of modern methods of construction (MMC).
“MMC brings much greater speed and efficiency to home building,” says Lalor. “Using offsite fabrication light-gauge steel panels with our strategic partner Vision Built in Galway, we can develop a scheme in west Dublin while providing employment in Oranmore. It’s very good for balanced regional development.
“We use a variety of structural forms best suited to the typology of the site,” he continues. “For housing, we use light-gauge steel, insulated concrete formwork (ICF) and timber frame. For duplexes and low-rise apartments, we would predominantly use light gauge steel from Vision Built. The benefits of offsite fabrication are significant to the scale and delivery of the projects that we have and expect to tender for going forward.”
Though MMC comes with constraints.
“Currently, public and private sector schemes can have a myriad of housing typologies. They can have four variants of three-bed and five variants of four-bed houses. That lowers the efficiency of offsite construction, which is at its best when house types are limited. Offsite construction has to be accommodated at the planning stage. There is no point in designing 15 types of homes and expecting MMC to deliver rapid build.”
BIM Level 3 is also vital, as it offers the precision required by offsite fabrication. But it requires a design freeze at a particular stage so that there are no further amendments.
“This allows for the offsite manufacturing to be done once the design reaches a certain point. If you go to a window or door manufacturer at the moment, they won’t make anything until they have measured on site. Traditional methods of construction have variations, but MMC precision is so high, you can place the order directly off the designs. The panacea is to do as much in the factory as possible. Ultimately, we will move to panels with the windows and doors already in them.”
Delivering social housing
There are other issues at play when it comes to the delivery of social and affordable housing, according to Fergal Lalor.
“One of the biggest challenges to the co-development of different tenure types is with how the land is brought to the market. We can see several different models in play at the moment.”
The first involves bringing local authority lands through a public procurement process, typically with the benefit of a masterplan and a tenure mix specification and seeking for the economic operator to develop a tenure blind mix.
“The challenge here is in bringing to market an affordable scheme that is typically 10% less than the market value,” he explains. “The factors affecting this are the cost of the land set by the local authority and the site services fund. In addition, the market awaits the delivery of shared equity schemes, and some cost rental are coming online this year.”
Land Development Agency
Then there is the Land Development Agency (LDA).
“The LDA is typically developing state lands outside of local authority ownership, and these afford an even wider range of tenure mixes, which will attract combinations of approved housing bodies, individual owners and institutional investors. Approved housing bodies, including those specialising in affordable housing, will remain the largest deliverer of schemes.”
Procurement will remain the single biggest challenge, he believes.
“In full acceptance that the public bodies must remain compliant, there are a variety of ways in which the timelines can be improved. Current local-authority developed schemes can take up to 33 months to deliver. This can be improved by 20% improvement to 27 months by running planning and procurement in parallel and improving construction delivery through maximising offsite fabrication and limiting the number of residential typologies on and one site.”
He argues that a more aggressive overlap can achieve further improvements with planning, such that by the end of the local authority Part 8 process, a preferred tenderer is selected.
“Along with the construction improvement, overlapping could bring the delivery period down to 22 months or a 35% improvement.”
And there are other benefits to be gained from early procurement.
“It would support the sustainability agenda by locking in more energy-efficient homes through planning for them at an early stage. It would provide mitigation to rising costs by involving the contract builder earlier to help come up with the most buildable and cost-effective solution, and it would offer an economic boost required for the industry and the overall economy post-Covid.”
Attracting new talent
Finally, Fergal Lalor points out that the industry will need to attract a lot of talent back along with new people if it is to deliver on the government’s housing targets.
“The industry built 20,000 houses last year, but the target is 35,000 a year. We need to attract people back to the industry and get new people to choose it for their careers. But the challenge is getting someone to enter into training or retraining for four or five years to work in an industry that experiences peaks and troughs. The government needs to stay the course in terms of putting capital investment into residential over the coming years,” he concludes.