Monday, October 22, 2018

Will Amazon and Google Find Housing in Their Push Toward the East Coast?

High Tech and the West Coast seem to be synonymous if you were to listen to the media. And maybe they’re right but two Tech giants are in the final stages of expanding their work and are serious about the East Coast as the best place to do that. Many more will follow.

Google is already leasing large amounts of office space in Reston, VA and Amazon will soon announce the location of their new second headquarters, most likely in the DC area.

Until Amazon’s decision of which city to choose for it's second headquarters developers with land and money are waiting on the sideline to begin building housing and commercial space for the tens of thousands of new employees that could begin streaming in fill positions at both of these High Tech firms.

Many new apartment buildings and condos will be needed as will affordable housing for not only their employees but the thousands of people moving into the area in support fields.

New hotels will be needed as well as restaurants, their subcontractors and myriad of other services just to support Amazon’s and Google’s invasion of the East and one of the biggest questions is where will these tens of thousands of people live?

Obviously there will be a ton of new apartments, affordable housing units and commercial structures like hotels needed and modular construction is the perfect answer.

Now all we need are modular factories capable of ramping up to meet the thousands and thousands of modules that will be needed. Time to check the “old modular factory capacities map of the Mid-Atlantic region.” And old is really the key word here.

Speed and new technology will be what developers need to meet the possible onslaught of new projects and sorry to say but the Mid-Atlantic modular map just can’t support adding another 10,000+ module units a year.

Investor money will have to begin flowing into the region to build modular factories. With labor shortage already a major problem for a lot of the modular factories don’t look for many of them to help ease this situation as they are running at or near capacity.

The answers to this upcoming dilemma fall into three categories. New factories, established factories ramping up production or foreign made modules from Asia or Europe shipped in.

New factories could be regional where a single factory serves a radius of 400 miles or a more likely scenario will be the “Pop Up” that leases a huge warehouse, brings in cranes and production lines to build several projects within a 0-30 mile radius and moves on to another warehouse when the project(s) are completed.

Existing modular factories are actually the best way to build these projects. First they already know the territory and have been building commercial and multifamily for years. What they need are investors willing to join with them to expand either their present plants or build new ones capable of turning out not hundreds of units a year but thousands.

And let’s not forget that China, Japan, Germany and Poland are already shipping modular projects to both coasts. Until it was put on the back burner Chicago was ready to have Chinese investors build 7 modular factories to produce 27,000 housing units.

Will these new factories be vertically integrated providing investors and developers with a “One Stop Shop”? You betchca!

Economists, factory owners and investors speak Ad nauseam at seminars about the coming need for high tech factories to fill the need for affordable housing.

The real question is why do we continue to just talk about ‘modular being the future of housing’ and do little to begin researching how to do it let alone actually building new modular factories?

1 comment:

Anonymous said...

I would be happy to answer the question about why more factories are not being built. Even with the ones that are up and operating and have track records, it is still like pulling teeth to get all the stakeholders in the industry to come to the party. There are simply too many people who have a vested interest in legacy building methods and will NOT change unless you provided a huge budget advantage. Even then many developers/GCs like to say... I will wait for someone else to do it.

There are, however, several new factories being planned.