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Freecity established Space Labs to coordinate design, procurement, manufacturing and delivery across its growing volumetric modular pipeline.
Part 1 of a two-part series examining the delivery model behind Freecity’s Herring Road student accommodation project.
As modules begin arriving for Freecity’s 528-bed Herring Road purpose-built student accommodation development in Sydney’s Macquarie Park, the project is providing the first major demonstration of the delivery model developed by Freecity and its wholly owned modular integration business, Space Labs Australia. (main image: A volumetric module is craned into position at Freecity’s Herring Road development in Macquarie Park, Sydney, as part of the project’s modular construction programme.)
Located adjacent to Macquarie University and close to the Macquarie University Metro Station, Herring Road is Freecity’s first student accommodation project and one of several developments expected to utilise volumetric modular construction as part of the company’s broader growth strategy.
For Freecity, however, the project is about more than construction methodology.
Founded with a focus on urban renewal and living-sector projects, the developer has assembled a pipeline valued at more than $7 billion across 12 mixed-use and residential developments. As that pipeline expanded, company leaders began exploring alternative approaches capable of addressing housing supply challenges, improving productivity and creating greater certainty around project delivery.
According to Benjamin Brown, Associate Director of Development at Freecity, Freecity was attracted to volumetric modular construction because of its potential to shorten delivery timeframes, improve manufacturing consistency and support sustainability objectives.
“We could see that the change would be through volumetric modular construction because of acceleration, precision and sustainability,” Brown said.
Rather than establishing its own manufacturing facilities, Freecity responded by creating Space Labs, a dedicated modular integration business responsible for coordinating design, compliance, procurement, logistics and delivery across future volumetric projects.
According to Space Labs, General Manager Angus Kell, the decision reflected a recognition that volumetric modular construction requires a different delivery model to conventional construction.
The modular integrator model
“Traditionally what would happen is you’d have a client, a main contractor and a subcontractor, and that subcontractor might be a volumetric supplier,” Kell said.
“In the scenario that we use, we don’t actually have that traditional subcontractor role.”
Instead, Space Labs acts as what Kell describes as a “modular integrator”, working across design, procurement, manufacturing, logistics and installation.
“Our role is to integrate modular into development decisions, integrate modular into design and assist in ensuring that we have sites that are VMC suitable,” he said.
“We know there are certain things that work in modular and certain things that don’t work, whether that’s at a factory level to get efficiencies in manufacturing or at a site level to make logistics as simple as possible.”
For Freecity, the objective was not simply to engage a modular supplier, but to establish an internal capability focused on integrating volumetric construction into every stage of project delivery.
The result is a model that sits between developer, consultant team, builder and manufacturer, providing a single point of coordination for the modular components of a project.
Completed student accommodation module at Freecity’s Herring Road development in Macquarie Park.
Choosing pipeline over factory ownership
According to Kell, one of the biggest constraints facing modular construction is maintaining sufficient project volume to support manufacturing capacity.
“The problem with getting a modular business off the ground is maintaining a pipeline,” Kell said.
Rather than building a factory and then pursuing projects to fill it, Space Labs was established around a different premise.
“We have a pipeline that’s provided to us by Freecity. Our role is to procure the manufacturing capacity needed to deliver those projects,” Kell said.
“To ramp up from 1,000 modules to 3,000 modules a year is incredibly difficult for a manufacturer. We can do that quite simply because of the way we procure.”
According to Kell, the approach also reflects the current state of the Australian market, where there are limited volumetric manufacturing facilities capable of supporting projects at the scale of Herring Road and Freecity’s broader development pipeline.
Kell said the model allows Space Labs to scale manufacturing capacity without carrying the capital burden associated with factory ownership. However, the company’s long-term ambition is to bring that manufacturing capability to Australia.
The approach enables the business to engage manufacturing partners based on project requirements while retaining responsibility for design integration, compliance, logistics and delivery.
The approach differs from many established modular businesses in Australia, where manufacturing facilities sit at the centre of the business model.
Watch the volumetric modules being manufactured.
A different approach to project risk
The structure has also influenced how project risk is allocated.
Kell argues that traditional construction contracts often push risk down the supply chain, placing significant pressure on specialist subcontractors.
“The historical model is that the developer and the main contractor push all the risk down to the lowest common denominator,” he said.
“We’ve looked at it very differently.”
Rather than concentrating risk with a single party, responsibilities are allocated according to each participant’s role.
“We don’t load up Space Labs with 100 per cent of the risk,” Kell said.
“The developer still holds some risk. The construction team still holds some risk. We hold some risk. It’s proportionate to what we do.”
Kell believes that approach is particularly important for emerging delivery models where multiple stakeholders are navigating unfamiliar procurement and construction processes.
“We are a true one-entity team and we share that responsibility.”
Watch Freecity’s volumetric modules arrive and lifted into position at Herring Road.
Herring Road as a proof of concept
For Brown, Herring Road represents the first opportunity to demonstrate the model in practice.
The company’s initial focus on purpose-built student accommodation was not accidental.
“We’re fortunate that our first three projects are PBSA projects,” Brown said.
“The typology is well suited to VMC. The room dimensions work particularly well with this type of construction methodology.”
The development is the first in a pipeline of projects expected to utilise the model, making it an important test case for future applications across the living sector.
While Space Labs was established to support Freecity’s growing development pipeline, Brown believes successful projects remain critical to wider industry adoption.
“You need exemplary projects,” he said.
“Projects such as Herring Road prove that this does work and demonstrate the benefits.”
