Modular has been tantalizing and teasing developers of
multifamily projects for years. The next couple of years could be the best commercial
modular construction has ever seen. Projects are going up in every part of the
country. Big modular projects in major cities, mancamps for the oil industry
and motels are the being switched from site built to modular faster than at any
time in history.
In conventional wood-frame construction, the whole building
is put together on site and each step must be done before the next can start.
Modular construction, on the other hand, can mix things up. Projects are
designed on computers and built in a factory where there's little need to worry
about water damage or worker injuries. The potential cost savings that could be
taken from more efficient labor and pre-bought materials are sorely needed in a
market where it's increasingly expensive to build.
Rapidly rising costs and labor shortages are causing more
developers into modular hoping for some relief from both. However there are
some big hurdles to overcome on the way to a successful project for the “new to
modular” developer.
The challenges include convincing investors to put their
money behind an unconventional project and making sure city officials sign off
on plans and issue building permits quickly. Finding a factory that has a staff
that can help a developer from conception to completion is adamant. A factory
that has little experience with commercial modular could end up losing both the
developers future business and in the worst case, even the factory may be
forced to close.
Once construction gets going, there are new kinds of
engineering challenges because there is no margin for error. When everything is
done in advance with a factory and it arrives at the site, the whole thing has
to come together just right. The details and the design and engineering are
more critical than on-site built building. With modular, if you're off by an
inch that's a big problem.
Contractors also have to block roads to allow 70-foot-long
trucks to haul pre-fabricated units in. And just getting a crane that can take
things that are that heavy is much more complicated than you think,
Those kinds of issues have taken heavy tolls on some of the
country's most ambitious modular projects. A For example, contractor Skanska
and developer Forest City are locked in a legal battle over who's
responsible for the heavy cost overruns on their 32-story modular tower in Brooklyn .
And promised cost savings may be a mirage in part because
contractors often end up using more materials. Units are built as boxes in a
factory, so they stack up wall to wall and floor to ceiling – doubling up what
builders usually need on each side.
For modular to be successful, general contractors working on
site also have to be in sync with subcontractors working in factories to ensure
that there's top-notch quality control.
The promise of lower costs hasn’t come to fruition. At times
it's been a higher cost for modular because you have duplicate work with the
on-site general contractor and at the factory. There have been concerns about the
modular industry's ability to deliver.
They cite the need to get creative about building methods
during a time when construction costs have risen up to 5 percent every year in
certain parts of the country. Those costs take a particular toll on nonprofit
housing developers, which rely on subsidies to get projects built without
raising rents to cover extra expenses.
For now, more and more developers are diving into modular
construction, warts and all. If your factory has primarily been building
residential homes and is looking to expand into more commercial and bigger multifamily
housing, you need to hire the expertise before you try tackling the first
project. Have them in place will help insure that your factory will have the
best chance for success.
That mid-sized project, those between the small multifamily
that most modular factories have done for years and the big, almost doomed to
fail projects like Atlantic Yards may be the factory's and the developers' sweet spot.
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