Market Overview

The domestic market of non-residential wood construction (new construction, extension, and renovation) for FY2021 decreased to 3,526,000m2 by floor area (down 8.5% from the preceding fiscal year), and the market size by construction costs fell to 595,200 million yen (down 8.7% from the previous fiscal year).  The pandemic diminished the market for FY2020 and FY2021.

A main reason for the sharp drop is the influence of the “wood shock”. * Because of the wood shock, building owners not only faced the difficulty of obtaining timber, but also ballooning of the construction costs due to soaring timber prices. Owners suspended or postponed the construction projects for the outlook of not being being able to secure expected investment yield. As a result, non-residential wood construction market declined significantly for two consecutive years.

*” Wood shock”: A global spike in lumber prices triggered by a surge in new housing construction, particularly in China and the US, during the pandemic, which led to an unprecedented rise in lumber material prices.

Noteworthy Topics

Non-residential Wood Construction Aligns with SDGs

While awareness of SDGs and carbon neutrality rises in the society, enterprises are expected to reduce environmental impact. Attracted by the characteristics of wood that store/reduce CO2, the construction industry has been shifting their focus from traditional SRC architecture to wooden architecture.


The demand is expanding for wood and hybrid (structure combining SRC with wood) office building. Although the non-residential construction market declined in FY2020 due to the pandemic, it is worth noting that office buildings, as defined as the “office (wooden)” in the MLIT’s "Building Starts" statistics, has shown a stable growth, attaining 100.1% year-on-year by floor area, 101.1% year-on-year by construction costs, and 100.2% by the number of buildings. 

Future Outlook

In consideration of the fact that restrictions on activities during the COVID-19 crisis are eased and economic activities are normalizing, which led to gradual resumption of suspended construction projects as well as elimination of wood supply shortage caused by the wood shock, the nonresidential wooden construction market for FY2022 is projected to grow to 102.1% on year-on-year basis to 3,600,000 square meters by floor area, and 102.5% to 610,000 million yen by construction expenses. 


Moreover, the market is forecasted to grow to 4,400 thousand square meters by floor area (124.8% on year-on-year basis), and to 610,000 million yen by construction expenses (129.4% on year-on-year basis) by FY2025. A key driving force factor of the market will be the full-scale rise of environmental awareness expected in the future, especially the enterprises making further commitments in SDGs and ESG investing. Since the characteristic of wood, which stores /reduces CO2, harmonizes closely with the idea of SDGs and ESG investing, enterprises are likely to adopt wooden construction hereafter. Since the use of wood is effective in reducing environmental impact (compared to other building materials), the nonresidential wooden construction market is expected to expand to FY2025.  

Research Outline