Wednesday, May 6, 2020

Modular Industry in Best Position to Take Over Mid-Rise Housing

Since 2010, the number of households that rent has grown from 32% to 36% with the addition of 4,000,000 new renters. Mid and high-income renters saw the biggest increase.

A VBC 3over1 project in Philly
With construction slowing down due to COVID-19 and lawmakers debating the pros and cons of rent forgiveness for those that lost their jobs during the crisis, rental housing developers are starting to play a wait and see game before building new projects.

Many housing developers already own the land they were prepared to build on which is some advantage and renters continue to cluster near public transportation and services to avoid having to own cars, the land available will continue to be more scarce and expensive.

The push for lower rental affordable housing will continue to be as allusive as the pot of gold at the end of the rainbow. Land prices and more restrictive regulations will push the raw land costs higher and higher.

Adding to the affordability problem after the COVID-19 crisis are the continuing shortage of skilled labor and climbing material costs. The question then becomes how will housing developers meet the need for more rental housing when this crisis abates.

One answer is building more units per project. Today more then 65% of affordable housing projects are large projects of 5 over 1, 50-200-unit types. These can be built more economically than any other type of affordable housing project coming in between $150-225 per sq. ft.

Many stick-built, mid-rise projects across the country are stalled as labor shortages and strict local labor requirements drive construction costs above $250 per square foot without corresponding increases in rents.

This is where modular construction steps in to be the ideal way to build these projects.

I am continually surprised that many land developers still have not investigated converting their new projects to modular. Instead, they choose to look for subcontractors from within a dwindling supply, buy materials at market pricing and have all the parts and pieces delivered directly to the jobsite and watch as their projected finish date keeps slipping further into the future costing them thousands of dollars a day.

Since the vast majority of these 5over1 apartment buildings feature only a couple of different floor plans per project, building them as modules on a production line 75-80% complete, delivered, craned into place and then finished by a local subcontractors will keep costs within budget and time to completion on schedule.

There are several great resources for affordable housing developers to research for more information on how modular construction can help keep profits and timelines on target.

A great source for all things modular is the commercial oriented Modular Building Institute (MBI) with members around the world. They were a leading partner in publishing the DODGE Data and Analytics report “Prefabricationand Modular Construction in 2020”, a must read for any housing developer looking at modular for answers to their construction needs.

For a more in depth look at what is available right now, look no further than the Modular Mobilization Coalition formed to make the design, production and delivery of medical units a more standardized and faster approach to help during the COVID-19 crisis. Their network of 30 factories across the US is also working to help affordable housing developers with 5over1 projects.

Spearheaded by VBC’s Vaughan Buckley and Momentum Innovation’s Colby Swanson and supported by the NAHB, its Building Systems Council and MBI, they have brought modular factories together to increase capacity where needed.

Housing developers can also have a more personal “one on one” conversation about 3over1 and 5over1 housing projects with Ken Semler, owner of Impresa Modular by visiting his website. As one of the most heavily involved people in all things modular, his expertise is sought out for projects of all sizes.

Adding to this list are the many online conferences and webinars being delivered almost every day by organizations like Housing Innovation Alliance.

If you are an affordable housing developer and haven’t yet looked closely at the advantages offered by modular construction, I must ask, “what’s stopping you?”

Gary Fleisher is a housing veteran, editor/writer of Modular Home Builder blog and Modular Construction Industry Observer and Information Gatherer

1 comment:

  1. Hi Gary, Need more info...on moderate to low income housing