Tuesday, March 20, 2018

Can Modular Fill Specialized Housing Needs?

Meetings after meetings are being held across the country by upper management of companies that build specialized housing. The main areas of discussion used to be about financing and finding investors. Not today however.

Today they are discussing ways to keep costs in check and better ways to build their product. Rising costs and a shortage of skilled labor is hampering their efforts and as always the discussion turns to alternate ways to build their dormitories, hotels, senior care facilities, homeless shelters and government subsidized housing.

The first alternative they all want to use is modular construction like Marriott is using to build many of their new hotels. The savings in time and access to the modular factory’s skilled labor pool offered by having fully ready and furnished modules built in a factory and shipped to the job is very appealing to these people. But a lack of modular housing factories is making it more difficult for developers and universities to completely change the way they build their projects.

The demand for student housing alone is only going to increase. The U.S. Department of Education reported in 2017 there were 20.4 million college and university students, an increase of 5 million students from 2000 to 2017. Hotel chains are ramping up the number of rooms needed and senior care housing is just now becoming aware of the advantages and benefits of modular construction.

Many projects just aren’t getting bids anymore. Pricing has become unstable and the skilled labor pool is all but dried up. Modular appears to be the answer.

The rush for homeless shelters and affordable housing by government agencies is beginning to create a rush to this type of housing. Google has contracted with several modular factories to exclusively build their affordable housing projects.

Guerdon is just one commercial modular factory building hotels, dorms and other commercial projects as fast as they can. Champion is moving quickly to become one of the biggest commercial modular players but this still leaves many big residential and commercial projects dropping off the ‘start’ page simply because the modular industry doesn’t have enough capacity.

The fear of a housing correction sometime in the near future is keeping rein on investing in new modular factories, both residential and commercial.

Building a repetitive product to meet a limited market like college dorm rooms could be one of the best ways to use modular construction. It could be either timber or LGS. The real advantage to this beyond a repetitive product would be less need for an Architect since the rooms would all be similar.

The factory’s engineering and CAD department could identify individual state and local codes and adjust for them just like they currently do for residential housing.

When foreign modular companies come to the US, look for them to go after large segments of construction that has until now been the domain of the site builder instead of going head to head with single family residential modular factories.

The downside of this is when US investors are ready to begin building modular factories to serve these new market opportunities that hadn’t embraced modular before, they will find the foreign factories have already picked the low hanging fruit and will have to fight to get what is left over.

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