Walmart and Arkquist to expand 3D printing commercial real estate

A version of this article first appeared in the CNBC Property Play newsletter with Diana Orrick. Property Play covers new and evolving opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large publicly traded companies. Sign up to receive future editions directly to your inbox.

walmart last year partnered with construction firm Alquist 3D to build an approximately 8,000-square-foot addition to its Athens, Tennessee, store that will offer pick-up and delivery services for online orders. It is the largest 3D printed commercial structure in the United States, and despite a rocky start, it is an important proof of concept demonstrating the commercial viability of the technology.

Greeley, Colo.-based Alquist just announced that it will print more than a dozen new Walmart buildings and other commercial retail buildings at the facility, perhaps the largest commercial real estate introduction of the technology, which until now has been primarily used in residential construction.

As part of that agreement, Sika, one of the world’s largest construction materials companies with a strong focus on sustainability, will provide materials to Alquist for all future 3D printing projects and licensees. According to Alquist, this will streamline Alquist’s domestic pipeline, reduce material and transportation costs, and accelerate the development of more sustainable combinations for large-scale 3D printing construction, including the commercial projects it is developing with Walmart.

“This partnership positions Sika at the forefront of next-generation construction, opening new markets and creating long-term growth opportunities,” said Noah Carantine, 3D concrete printing engineer and field service specialist at Sika.

This is a clear turning point in CRE construction, which is notoriously slow to modernize. While this new technology is starting to grow in the residential construction market, commercial construction is far behind. This is simply due to the size of the printer needed to build larger buildings.

Alquist designs and manufactures large printers, as well as develops the code and software to operate them, and got its start in the residential sector. The company is currently partnering with major equipment rental dealers and full-service general contractors to commercially scale this technology nationwide. Doing so will help reduce high material costs and the need for a trained workforce to be trained on-site, Alquist said.

“The way you bring the price down (of something) is to increase the volume,” said Patrick Callahan, CEO of Alquist. “When you have more volume, you get more attention from suppliers. Suppliers understand that it’s important, and the more you produce, the cheaper it is to bring down the supply chain.”

Callahan’s background is in defense technology, not construction, and he positions Arkquist as a technology company. He said he is following company founder Zach Manheimer’s mission to find ways to build residential and commercial buildings and infrastructure faster, cheaper, better and greener.

He admitted that the first project in Athens took too long as he worked out problems both in managing the materials and implementing the technology to print the first commercial building.

“It was kind of a classic Silicon Valley failure spree,” Callahan said. “We weren’t involved in the design process. They changed the permits. … The general contractor we worked with met with us about a week before we broke ground, and no one had ever done anything like this before.”

The second project, a 5,000 square foot Walmart pickup center in Huntsville, Alabama, took just seven days to complete.

Projects require far fewer workers, but require a higher level of training than the general construction industry. Alquist partners with vocational schools on the curriculum and incorporates robotics and environmentally friendly materials. Callaghan said that’s more attractive to the construction labor market, which has shrunk significantly in recent years.

“We’re not necessarily throwing rocks on scaffolding, but we’re using robots in a safe, clean environment,” Callaghan said. “We’re seeing a lot of traditional construction site people who used to be pushed aside, and now they’re leaning in.”

Icon Build, the largest provider of residential 3D printing technology, is also expanding into commercial construction. The company has completed a hotel project and is currently negotiating with potential commercial partners, including the construction of a data center. Future Titan printers will be able to handle these large-scale projects.

“I think once this gets out there and shows what we can do and validates the cost estimates that we’re making to our customers, it’s probably going to open a lot of people’s eyes,” said Jason Ballard, Icon co-founder and CEO. “I think we’re going to see a lot of interest in alternative construction methods, data centers, and other types of commercial things as well.”

But Ballard sees stronger headwinds than Callahan, especially on labor. He said data centers are already “siphoning a lot of labor out of the market.” He added that 3D printing of commercial buildings, like homes, will be under pressure to be more affordable and faster than traditional construction methods.

That said, Ballard said Icon will be manufacturing at least one new Titan printer every month next year, preparing to dramatically expand construction. Although these printers are not compatible with high-rise buildings, they can create most types of industrial and commercial buildings.

“If we do what I expect next year, we’ll be able to show results both on the revenue side, on the cost side and on the technology advancement side. I think we’ll see over 300% growth next year. This year has already been pretty busy,” Ballard said. “I think the world is going to start saying, “Maybe there’s a real opportunity to go beyond pilot scale and do better.”