Friday, January 17, 2020

Developer Decides to Cut Out the Middle Man by Building Modular Factories

Apartment Developer Plans To Build Modular Housing Factories Across The U.S.

A BISNOW Article:

For years, Place Properties developed its apartments the traditional way: find a site, bring in the materials and use crews to build it from the ground up.


But Place CEO Cecil Phillips is now all-in on a new way of developing apartments: assembling them in a factory hundreds of miles away, then putting the pieces together like a puzzle on the site.

The method is called modular construction. Phillips calls it the future of the housing industry, and he's placing a more-than-$30M bet that he's right.

“America, like in a lot of other places, we want what we want, we want it right away,” Phillips said at a Bisnow event in Atlanta last week. "Modular construction does more to scratch that itch, if you will, than traditional construction ever will."

Place Properties owns and operates 3,200 apartment units in Georgia, Texas, Oklahoma, North Carolina and Virginia and has developed or owned 50,000 student housing and military housing units since 1995.

It is putting the finishing touches on its first modular housing project in Atlanta and has plans to break ground on its first modular townhome project this spring. The firm is also in talks to acquire a site in Metro Atlanta where it plans to build a 125K SF modular housing manufacturing facility, Phillips said.

He declined to disclose the specific location until the deal is finalized. He said he's formed partnerships to help fund the development, which he expects to cost $32M, factoring in the factory's equipment. Phillips expects to spend $3.3M a year to operate the plant, including training workers prior to opening.

At full operation, Phillips expects the factory to employ upward of 200 people and will be able to produce a single-family dwelling every three to four days and eight apartment units a day. The plant would not only be used for Place projects, but also be open to third-party developers and owners of housing and apartments.

The plant will have a trade area of up to 850 miles, meaning it could service as far north as New York City and as far west as Austin, Texas. The plant is just the start: Place plans to roll out a series of similar plants across the country.

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