Thursday, June 25, 2015

Modular Housing Stuck in Never-Ever Land

The industry is seen as being in need of revolutionary new ideas if it is to ever fulfill its long-running promise of delivering high-quality, low-cost housing.

The modular-housing industry desperately needs an infusion of new ideas akin to Amazon's online retail platform or Tesla Motors' electric car before it can even begin to play a role in helping the de Blasio administration build or preserve 200,000 units of affordable housing over the next nine years, according to experts who spoke on a panel Monday night.

The New York chapter of the American Institute of Architects hosted the talk after city officials informally inquired as to whether modular could feasibly play a role in the mayor's plans. And though the panelists from top city architecture firms agreed that the futuristic method presented the perfect alternative to hopelessly expensive and inefficient current construction practices, they also conceded that no one within the industry is prepared to take on reform in a major way.

"It is going to be some character like [venture capitalist and Tesla CEO] Elon Musk, who says this is the most ridiculous industry on earth ... and is counterproductive in every way, shape and form," said Stephen Kieran, partner at architecture firm KieranTimberlake, which is has several modular projects under its belt.

The concept of modular construction, in which apartments are built in a factory and then stacked on-site, has been hailed as the future of development since the first such units rolled off an assembly line decades ago. Yet for all its promise, the industry is still nowhere near providing the sort of cheap and quick housing units that places such as the Big Apple are in dire need of, according to the experts.

For one, the factories where the units are built have not scaled up enough to make any sizable dent in the city's housing problem, and shipping the units by truck is extremely expensive.
In response, Garrison Architects, the designer of a modular hotel going up in Williamsburg, Brooklyn, decided to ship the units by boat—from a factory overseas, where labor costs are also lower.

"These guys were actually shipping 170 modules from Poland for less money than was budgeted to ship them from Indiana," said James Garrison, principal of the firm.

Innovation in modular construction has been slow in part because architecture firms don't have the capital to embark on long-term experimental projects that might advance the industry. In fact, they have trouble financing the types of cutting-edge buildings that are being stacked into place today.

"Another challenge in this process was to work with lenders who could get comfortable paying for something they couldn't kick, they couldn't touch, they couldn't see up in the air—and that's a big problem," said Jeffrey Brown, chief executive of Jeffrey M. Brown Associates, who discussed a successful modular building his firm built along with Gluck+ Architects in Manhattan's Inwood.

While the cost of Mr. Brown's project came in at $200 per buildable square foot with no overruns, it is little wonder banks might balk at such loans when larger-scale projects like Forest City Ratner's 363-unit B2 BKLYN project, in the shadow of the Barclays Center, have been mired in lawsuits, run tens of millions of dollars over budget and are at least a year behind schedule. However, the American Institute of Architects' New York acting president, Tomas Rossant, said that the project is still a big step for the modular industry.  

In the meantime, the architects did have a number of suggestions that might make building modular in New York City easier. For one, the city could make new provisions into the zoning code that would allow developers to build higher to offset the thicker-than-normal floors often found in modular buildings.

In addition, many of the panelists suggested a tax credit to incentivize building, and shrinking the size of a standard modular unit so that it could fit onto a standard-size tractor trailer. That would avoid special scrutiny by the city's Department of Transportation and could even be delivered during the day instead of at night, when there is little traffic that can be disrupted.

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