Low-emitting, ‘Lego-style’ homebuilder nabs $1.25M investment from TAF

A Toronto-area builder of modular, prefabricated mass timber housing has received a major boost from The Atmospheric Fund, or TAF.

One factor in the TAF investment decision was Assembly Corp’s focus on existing city neighbourhoods that already have infrastructure in place. Assembly Corp. photo.

This article was published by The Energy Mix on March 7, 2024.

By Mitchell Beer

A Toronto-area builder of modular, prefabricated mass timber housing has received a major boost in its bid to introduce a “Lego-style” approach to affordable, energy-efficient construction.

Assembly Corp.’s standardized designs integrate passive house principles, geothermal-based heating and cooling, and smart thermostats, reduce climate emissions and construction time by up to 60 per cent, and deliver lower operating costs after occupants move in, The Atmospheric Fund says. In mid-February, TAF announced a C$1.25-million investment in the company, which was known as R-Hauz when it first opened in 2017.

“Our interest in Assembly goes beyond just demonstrating that new building infill can be done affordably with low-carbon approaches,” TAF Vice President of Impact Investing Kristian Knibutat said in a release. “This is just the type of solution we need in the region to scale high-performance, affordable new construction projects.”

In an interview, he said the investment aligns well with TAF’s latest emissions inventory for the Greater Toronto and Hamilton Area (GTHA), which showed 46 per cent of the carbon pollution coming from buildings.

“It’s hard not to read every day about a lack of affordable housing,” Knibutat said in an interview, and “governments rightly have been moving as quickly as possible to address that issue.” But “if we continue to build housing that has not been designed with an energy-efficient, green lens to it, to a carbon-neutral standard or at least with a major emissions reduction, we’re going to perpetuate the problem we have right now.”

Despite all the hard work now going into energy retrofits, he added, “if we don’t change the new buildings coming in, we’re just creating more problems for ourselves in the future.”

That missed opportunity also creates “a liability for those future homeowners, because eventually they’re going to have to have those houses adapted to be energy-efficient and green,” he said. “If they’re not done today, they’re going to have to be done in future. From an economic perspective, not to mention a carbon emissions perspective, it’s cheaper to do that today than to try to retrofit something years down the road.”

Another factor in TAF’s investment decision was Assembly’s focus on existing city neighbourhoods that already have infrastructure in place.

“Their target market is infill, so we’re not talking about building a new subdivision that’s going to create urban sprawl,” Knibutat explained. “It’s looking at what we would term the missing middle. You tend to see construction that is either single-detached or big towers, but they’re looking at the two- to eight-storey range where there’s an incredible opportunity for infilling. If you look at some of the communities around transit hubs that have maybe two storeys, and could now be converted into a mass timber construction that would go to eight, they’re really addressing a market that’s not been well serviced.”

The TAF release says Assembly buildings could reduce operating and embodied carbon in the GTHA by 554,535 tonnes over 20 years, just over 1 per cent of the region’s total emissions in 2022, while helping to meet urgent demand for affordable housing and offering better health and safety for residents. “Assembly’s projects also generate economic and job development, relying on local resources and boosting demand for low-carbon building skills,” TAF said in a release.

[Disclosure: Energy Mix Productions provides editorial services to TAF, but has had no role in developing this announcement.]

Get Out There and Build

Interest in prefabricated or manufactured housing dates back decades, but is often greeted with skepticism by builders and developers who either don’t appreciate the competition, or don’t believe prefab can deliver. They’ll sometimes suggest the approach shows promise, but still needs to be proven commercially.

Francesca MacKinnon, Assembly’s director of sales and marketing, cited two factors that set the company apart from other prefab builders: its relatively narrow focus on laneway, garden suite, and mid-rise designs, and an early decision to get out into the field and learn by doing.

“Right now, what differentiates us is that we’re building now,” she said in an interview. “A lot of these companies have tried to figure out the design side and the building information modelling,” putting a lot of time into pre-construction work before building any actual housing.

“We took the other approach. We started building and tried to figure it out as we went along.” That meant making “a tonne of mistakes along the way.” But MacKinnon said Assembly still delivered its first two non-profit housing projects in less than a year and brought them in on time and on budget, one of them for the Region of York in East Gwillimbury, Ontario, the other for the Mississaugas of the Credit First Nation in Hagersville.

This year, Assembly has 12 mid-rise projects under construction, with another four set to start at the end of March.

“We’ve managed to figure out the solution that really is ideal for non-profit housing corporations because we’re able to build fast and build sustainably,” MacKinnon said. “Not only are we getting housing quicker to the people who need it most. We’re also doing it using sustainability attributes and [delivering] a happier product to live in.”

Knibutat said TAF appreciated a development approach that was “more roll up your sleeves, get in there, start building the stuff, and constantly iterate and change and improve as you go. The whole mindset is a real positive,” helping to make the next build “that much better and more efficient.”

He also pointed to a “far more collaborative” contracting system on Assembly projects, in which “all the main trades involved with constructing the business have aligned interests in getting the building built on time and on budget.” The approach “gets projects built more quickly, and I would argue that it also comes with better quality.”

Mass Timber Construction

A distinguishing feature in Assembly Corp. housing is that it leans heavily on mass timber construction, another emerging technique that is gaining acceptance but raising some flags about supply chains and forest industry greenwashing. MacKinnon acknowledged the concerns.

“It comes down to trusting our partners throughout the supply chain,” but “also making sure we’re having the conversation with them, that they’re looking into it, as well,” she said. Mass timber construction is still more common in Austria, for example, than it is in Ontario. But “there’s growing investment and interest in this type of housing, and in figuring out how to use a fantastic, naturally renewable resource in the best way possible. There’s an opportunity to maybe answer the hard questions now, so that as demand and volume expand, we can support that.”

As for the old perceptions about prefab housing, MacKinnon said she’d seen attitudes shift in her three years with Assembly, and Knibutat said he’d heard the same when he was doing due diligence on TAF’s investment. “Anecdotally, the workers onsite were telling us that people were walking by the laneway suite they were building and asking for business cards,” he said.


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