A few months ago I saw something that blew my mind. It was a photo of the redesigned airport in Portland, Oregon:
The natural wood, the light, the warm, airy design… I don’t know much about architecture, but this looks amazing. So I wanted to find out more.
It turns out that the Portland Airport was built using something called mass timber — a rapidly-growing new construction method which is cheaper, easy to work with, more environmentally friendly, and just plain looks cooler.
The airport is one of the world’s highest-profile mass timber projects, and has received plenty of fanfare. But it’s one of over 2,200 mass timber projects in the US alone.
Mass timber is being described as the building material of the future. Today we’ll learn what it’s all about, why it’s growing, and how you can invest in an industry surprisingly few people know about.
Let’s go 👇
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Table of Contents
What is mass timber?
For decades, the world’s architects have dreamt of a single building material that can be used as a structure, shell, facade, and interior.
Mass timber has become that dream material.
It’s strong enough to be used for constructing a building’s exterior structure, while its texture, grain, and “bendability” (yes, that’s a word) creates an extremely inviting, attractive interior.
So what exactly is it?
Mass timber products are engineered wood panels.
Wood is cut and fused together to create high-strength support beams, posts, flooring, and roofing components that replace traditional steel and concrete.
The strength comes from a highly engineered material called Cross-Laminated Timber (CLT). Enormous panels are made by placing layers of parallel beams atop one another perpendicularly, then gluing them together to create material with steel-like strength.
Cross-Laminated Timber (CLT) is the “king” of mass timber, and the most well-known. But mass timber comes in several other forms:
- Nail-Laminated Timber is easy to manufacture and does not require adhesives, but doesn’t have the same fire resistance or performance characteristics as CLT
- Dowel-Laminated Timber is considered one of the most sustainable options. It provides the best acoustic performance due to the lack of metal connections.
- Glued-Laminated Timber, which is ideal for curved or long-span structures
You may be thinking, “But this is still just wood, right? How high can we build using this stuff?”
Sure, we can’t engineer something as tall as The Burj Khalifa. But we can achieve much more than we could with traditional lumber buildings.
And the size and scope of recent mass timber projects will surprise you.
Notable mass timber projects
Ascent Tower, Milwaukee, WI
At 25 stories high, the Ascent Tower in Milwaukee, Wisconsin, is currently the tallest mass timber building in the world.
Completed in 2022, the residential tower utilizes a concrete core to support its height and meet structural requirements. But the rest of the core structure is wood.
Portland Airport
The $2 billion expansion didn’t just look great, it doubled the airport’s capacity and set a new standard in airport design.
The goal was to reduce travel stress by creating a tranquil environment filled with natural elements; to evoke the feeling of walking through a forest.
“The exposure to natural wood in a non-uniform pattern has a psychological effect on us.”
– Jacob Dunn, principal of Portland-based ZGF Architects
There’s more to come, too. The second phase will be completed in early 2026 and will further showcase the aesthetic benefits of using mass timber on large-scale projects.
Hotel Magdalena, Austin, TX
Hotel Magdalena in Austin, Texas is the first American hotel constructed using mass timber.
The decision to use mass timber on this project was driven by the sustainability benefits and faster construction times.
It was a good call. Mass timber saved the firm three months of building time versus their initial estimates.
“Utilizing mass timber construction is consistent with the feel and integrity of a Texas lake house…a crucial component to Hotel Magdalena’s atmosphere. The exposed wood provides a warmer, more textured material… The mass timber helps tell the story of how the hotel was built while paying homage to the premises.”
– Amar Lalvani, CEO
Dalston Works, London
Completed in 2017, Dalston Works in London was the most voluminous CLT building ever created, and the third tallest timber-based building in the world.
Due to the use of CLT, Dalston Works is 80% lighter than a conventional building of the same size.
The lighter weight meant smaller foundations were required, and the developer could build 14 additional residential units on the space.
Other projects
- Schools from Japan to Costa Rica are morphing into inviting learning spaces.
- 25 King in Brisbane is the tallest mass timber office in Australia
- The Kyathos sports arena is a new ambitious project in Greece.
- And the plans for this new Gloucestershire mass timber stadium are even more grand.
- At 328 feet, Rocket in Winterthur, Switzerland is one of the tallest timber residential buildings currently in planning.
Why mass timber is growing
It’s rare to have a building material that’s both better looking, cheaper, and more sustainable. Mass timber is that dream building product.
In 2023, the mass timber industry generated revenues of $1 billion (though it’s still a rounding error compared to the $1.3 trillion global construction materials market).
Aesthetics are nice, and so are the environmental benefits. But it’s the cost savings that will really drive the industry’s projected 8% annual growth over the next decade.
Cost savings
We all know money talks, and in the mass timber industry, it’s shouting.
Mass timber products are increasingly emerging as the most cost-effective building solution.
Research by Waugh Thistleton has shown CLT construction is about 15% cheaper than conventional steel and concrete.
Based on Wood Solutions data, using mass timber rather than traditional products on a 7-story building can reduce construction costs by $1.1 million, or 14%. That’s a serious chunk of change.
- Mass timber is prefabricated, which means faster construction times and lower labor costs.
- Mass timber is lighter and has a higher strength-to-weight ratio than concrete or steel. This means you need less product, and net sellable area (or gross floor area) tends to be higher.
Sustainability advantages
The environmental impact here is nothing to sneeze at.
Since 2007, manufacturing and construction have overtaken agriculture as the third largest contributor to greenhouse gas emissions.
A big reason for this is concrete. While concrete is cost-effective, cement literally accounts for around 8% of all global CO₂ emissions.
Wood, however, is renewable like any crop. And it’s a carbon sink, sequestering the carbon dioxide it absorbed during growth even after it’s been turned into lumber.
But mass timber is the gift that keeps on giving.
Today, mass timber is primarily sourced from sustainably managed forests in North America, particularly in the Pacific Northwest.
It has a low manufacturing carbon footprint compared to alternative materials, and sequesters carbon at a rate of 1-1.2 tons/cubic meter of wood — vastly superior to concrete.
It’s the best of both worlds.
This is music to the ears of the construction sector, which is looking to save money and reduce its carbon footprint to meet government and corporate targets.
Quality benefits
Wood buildings likely improve people’s well-being.
Granted, these sorts of intangible externalities are hard to quantify. But they are no less real.
Early mass timber architect Michael Green did a good job of this in his TED talk on the advantages of wooden skyscrapers:
“Every time people go into my buildings that are wood, I notice that they react completely differently. I’ve never seen anybody walk into one of my buildings and hug a steel or concrete column, but I’ve actually seen that happen in a wood building.”
However, mass timber has significant quality benefits beyond aesthetics and “sense of place.”
Insulation
Mass timber buildings are becoming known for their insulation properties, cooler internal air temperatures and concurrent thermal comfort.
CLT is 5x more insulative than concrete and 350x more so than steel. That means less energy is needed to heat and cool a wood building.
This gives architects a new weapon to create the holy grail of comfortable air temperature they aspire to.
Structural integrity
Mass timber’s structural integrity is generally better than steel and concrete, so mass timber buildings are well-positioned to navigate natural disasters.
In addition, when damage does occur, the required repairs tend to be cheaper and easier to complete.
Decreased fire risk
Yes, wood is combustible, but not all wood is created equal.
CLT performs well in terms of fire safety – a subject particularly in the public mind since the 2017 Grenfell Tower tragedy.
In the event of fire, the surface of the material burns, but acts as an insulation protecting the load-bearing core of the material.
This means that CLT is shockingly stable when it burns.
“Steel, when it burns, it’s like spaghetti… [but] a thick plank of wood will char on the outside, sealing the wood inside from damage.
– BJ Yeh, Engineered Wood Association
How to invest in mass timber
Mass timber is still a small, emerging industry.
It has just 1% of the North American building construction materials market. Old construction habits die hard, and we’re still early.
But it seems poised to become a breakout market, considering the immense benefits for all parties involved. If you want to invest in this space, you need to understand the key players.
Here are a few companies which I believe are partially well-positioned to ride this wave.
Listed opportunities
Mercer International (USA) 🇺🇸
Mercer International is a global forest products leader, and one of the world’s largest producers of Northern Bleached Softwood Kraft (NBSK) pulp, which is a high-quality pulp used in various paper and tissue products.
It also has an expanding role in sustainable energy production from biomass, a byproduct of its pulp production process.
In June 2023, they acquired Structurlam to increase its exposure to the mass timber growth thematic.
The company produced 11,000 tons of mass timber during Q2 2024. The bad news is that 11,000 tons represented just 2% of Mercer’s Q2 production. So Mercer’s mass timber exposure is minor at a group level.
What’s more noteworthy is the company’s mass timber growth rate: production increased 54% QoQ in Q2.
At that rate of growth within a broader portfolio which has been declining lately, mass timber is on track to become a much bigger part of Mercer International in the coming years — and a key growth driver.
Now, here’s the thing: Mercer’s stock has been flat for 34 years. But it’s spiky — doubling or tripling every few years. And they also have a 4.5% dividend yield.
West Fraser Timber Co (USA) 🇺🇸
Integrated wood products group West Fraser Timber is also positioned to benefit from the boom in mass timber.
All of their recent presentations mention mass timber as a ‘longer term demand driver.’
And in their Q1 results they commented:
“Over the longer term, growing market penetration of mass timber in industrial and commercial applications is also expected to become a more significant source of demand growth for wood building products in North America.”
But while management rhetoric is encouraging, it’s hard to quantify the company’s current exposure to mass timber.
So, West Fraser Timber seems to be a similar type of mass timber exposure as Mercer International. i.e. — the company is exposed to the theme, but it’s starting from a low base so it’s not a major business driver as yet.
Unlike Mercer, West Fraser Timber is flirting with all-time highs. So this isn’t a value play — it’s a stock to think about longer term if you’re after exposure to mass timber.
Stora Enso (Finland) 🇫🇮
Finland has a rich history in modern design and sustainable building materials. Finnish design is known for its simplicity, functionality, and deep connection to nature, drawing heavily on its natural environment.
So it’s no surprise that Stora Enso is a Nordic forest industry company with a new focus on mass timber.
Within the company’s Wood Products division, which represented 18% of group sales during Q2 2024, Stora Enso has a strong position in cross-laminated timber (CLT) and laminated veneer lumber (LVL).
So, this is purer way to play the mass timber theme.
However, in contrast to the strong growth experienced by most companies in their mass timber operations, Stora Enso referred to lower CLT and LVL demand as a main reason for its 5% decrease in Wood Products sales during Q2.
That’s not ideal from a mass timber-focused investor’s perspective. Hopefully, management will be focused on positioning their business to better benefit from the rising mass timber adoption wave.
But in the interim, this one may be worth keeping on your watch list.
Mayr-Melnhof Holz (Austria) 🇦🇹
Fun fact: CLT actually has its roots in Austria.
In the mid-1990s, the Austrian government funded a joint industry-academic research program to develop new, stronger forms of “engineered” wood to soak up the country’s oversupply of timber. The result was CLT.
Mayr-Melnhof Holz is a Vienna-based timber processing company. It’s a major producer of glued laminated timber, and a driving force in advancing cross-laminated timber. Big ticks all around.
While that sounds great, the company’s most recent sales split revealed that the company’s Board & Paper division represented 42% of sales, Food & Premium Packaging represented 42% of sales, and Pharma & Healthcare Packaging was 16%.
You may notice there’s no mention of wood products or mass timber in that breakdown. And therein lies the challenge with this stock.
We’re not doubting the company’s word that they’re an emerging mass timber leader, but some clarity on the numbers would be useful.
Without more detail, Mayr-Melnhof Holz should be considered a more speculative mass timber play at this juncture.
Private/unlisted opportunities
As you’d expect with mass timber’s strong growth prospects, there are several unlisted companies positioning themselves to benefit.
These emerging businesses may well need more capital as they scale up. So if you’re interested, it’s worth reaching out and expressing your interest in future investment rounds.
Established companies
At the more established end of the unlisted market, I found a few players:
- 🇬🇧 BSW Group is a leading UK forestry company which increased its mass timber exposure with the acquisition of the Binderholz Group. Sustainability is their main business driver.
- 🇨🇦 Kalesnikoff (Canada) describes itself as ‘North America’s most advanced, vertically integrated, multi-species mass timber manufacturer.’ That’s about as mass timber-focused a company as we’ve come across in this search, so this one is worth following.
- 🇦🇹 Hasslacher Holding GmbH (Austria) is a diversified forest products company with a focus on CLT.
- 🇨🇭 Schilliger Holz AG (Switzerland) is also a diversified forest products company with a new focus on CLT.
Startups
We also found a few higher-risk startups focused on mass timber that look interesting:
- 🇺🇸 Juno (US) designs and builds sustainable homes using mass timber. They use a combination of repeatable architectural components and proprietary software to accelerate the development process, minimise material waste, and maximize on-site productivity.
- 🇨🇭 Timber Finance Initiative (Switzerland) mobilises impact capital for all parts of the sustainable forestry value chain. The company is also developing a global, open-source methodology to enable the creation of impactful carbon removal certificates for mass timber construction & more sustainable forestry practices.
- 🇦🇺 CLT Toolbox (Australia) is aiming to address the structural engineering bottleneck (lack of specialist mass timber knowledge) that sometimes limits mass timber adoption with software that automates computations and material guidelines to make designing with mass timber as easy as possible.
Closing thoughts
I’m surprised that mass timber’s current annual growth projections are just 8%. You’d expect this to be a bit higher given the advantages.
Perhaps it’s just early. Old construction preferences die hard, and plenty of powerful companies are vested in keeping the industry’s foundations rooted in concrete & steel.
There are also a few downsides I didn’t dive into. While mass timber has successfully been proven up for use in mid-rise buildings (25 stories in the US, 24 stories in Austria, 18 in Norway and Canada, and 10 stories in the UK), the load-bearing capacity limitations will prevent mega-towers from being built purely using CLT.
As the technology improves, so will its load-bearing capacity. And in the interim, a hybrid approach that combines mass timber with steel and concrete is a perfectly fine option.
Global timber supplies are expected to decrease over the long term, so the availability of sufficient quantities of timber to fuel the mass timber industry’s growth trajectory is a risk to be aware of.
It is unlikely that we’ll see wood towers rising as high as today’s supertall skyscrapers. But that still leaves plenty of opportunity.
Remember, that even in the world’s largest cities, only a handful of buildings are taller than 40 floors.
Mass timber seems like a no-brainer for constructing these 4-40 floor structures. Expect to start seeing many more of these beautiful buildings in cities around the world.
After all, it’s not just about the environment or aesthetics; it’s about math. 🪵
That’s it for today!
There is lots of interest in mass timber within the Alts community, including one Altea member who is about to raise money for a very unique CLT startup.
If you work in the CLT industry and want to connect with him, let us know. He’d be delighted to chat with you. This could be something special.
See you next time,
Simon
Disclosures
- This issue was written & researched by Simon Turner and Stefan von Imhof.
- Neither author has any holdings in any of the companies mentioned in this issue.
- Altea has no mass timber holdings.
