What if homes were built more like cars – on an assembly line in a factory?
Rick Holliday thinks it should. The longtime Bay Area developer has turned a former naval submarine factory into a factory that does just that. Factory OS workers build apartment building components on Mare Island in Vallejo, California, about 40 miles from San Francisco, then transport them on flatbed trucks to their final location. “At the end of the process, it comes out and it’s a fully formed apartment that you put together like Legos to form a completed building.”
The process can cut the time it takes to build an apartment building in half, to around 11 to 12 months, he said, with multiple parts of construction happening simultaneously in a controlled environment, which means fewer delays. and a more streamlined process. in general.
Mr Holliday, who co-founded the plant with Larry Pace, said doing it this way, rather than building a building on-site, also cut costs by up to 30%. In the Bay Area, where the cost of building a single affordable housing unit is around $ 1 million, that can make the difference between a developer building an apartment or not.
“I entered the industry at 26 and building is no different from when I started,” said Holliday, 68. “If we don’t take a different approach to building, we’re not going anywhere.” So far, Factory OS has completed 10 buildings for a total of approximately 1,200 units in Northern California and has secured financial support from technology companies like Google, Autodesk and Facebook.
A year and a half after opening its doors, the pandemic has struck. Even as demand for housing accelerated, construction stagnated. Prices have skyrocketed for essential materials like lumber, further raising the cost of construction and exacerbating the affordability crisis in California, especially in the already expensive Bay Area where the median price of a home single-family home now exceeds $ 1 million. Nationally, home prices rose 18% in July compared to the same month last year, according to data from CoreLogic.
Mr. Holliday said the upshot is that more developers in this traditional, stilted industry have been willing to experiment in an attempt to cut costs and get projects done quickly. Result: “We were inundated with work. Factory OS has expanded to add a second factory just behind the first. The company has 24 other projects underway and plans to open a third plant in Los Angeles over the next two years to meet demand in Southern California.
They aren’t the only company trying to change the way homes are built. IndieDwell, a three-year-old Idaho-based startup, builds pre-fabricated and pre-fabricated multi-family buildings, single-family homes and emergency housing. And there’s Blokable, a Sacramento-based company launched in 2016 to build and develop pre-fabricated multi-family buildings. (Factory OS typically works with developers as customers, rather than developing and owning the buildings themselves.)
Stonely Blue, a San Francisco-based venture capital firm and investor in Blokable, said a combination of factors ranging from climate change to labor shortages ultimately sparked interest from the tech world in innovation in construction. “Over the past decades, the focus has been on software,” he said. “It slowly comes down to hardware and there is nothing bigger and more difficult than buildings. “
Yet modular construction is a concept that many have tried to innovate and failed. Pulte Homes, one of the nation’s largest home builders, opened a prefab factory in the mid-2000s and then closed it in 2007 when the housing bubble burst. Katerra, a high-profile, Silicon Valley-based prefab construction startup that has grown very quickly and widely, filed for bankruptcy earlier this year. The company, which had factories in California, Washington and India, was launched in 2015 and had $ 2 billion in funding and received a $ 200 million SoftBank cash injection in an attempt to save the company in December 2020.
“I’m totally convinced this is the way to go, but it’s really hard to get there,” said Randy Miller, co-founder of RAD Urban, a bay area-based modular construction company that went bankrupt earlier this year.
For starters, setting up a factory doesn’t come cheap, and the challenges are many. Unlike general contractors, who have low fixed costs, modular builders must continue to pay to operate a plant even when business slows down and during lulls between projects. “You can’t just flip a switch and turn on a factory,” said Miller, who plans to start another modular construction company soon.
The Factory OS approach is a 33-step process, and just like building a car, it begins with the chassis, or the lower part of the building, which is filled with pipes and ducts for the construction work. plumbing and electricity. One recent morning, at least a hundred workers wearing helmets and masks hammered and sanded several long, narrow apartment shells that were laid out lengthwise like railroad cars. (The factory is about the length of three football fields.) It was a noisy and dusty scene, but also tidy and efficient.
Some workers install pipes under a raised box-like structure on a rack so that they can more easily reach low areas than on a typical construction site, where they would have to squat underneath. Nearby there was arms that could rotate structures for easy access too. On the other side of the factory, neatly arranged components – from tubes to insulation to kitchen cabinets – sat on shelves. It looked like a very specific Home Depot display.
Factory OS focuses primarily on affordable housing – about 80 percent of what has been built here ranges from housing for the homeless to below-market apartments for low-income workers, artists, and students. The company also supports a handful of luxury and market rate projects, but over the past three to five months demand has been such that Mr Holliday said he had to turn down deals.
Towards the entrance to Factory OS, a completed model apartment unit stood like a large box that visitors could walk inside. The 25-by-12-foot studio had sturdy vinyl flooring, a two-burner stove, built-in kitchen cabinets, and a stainless steel refrigerator. Behind a farmhouse style sliding door there was a good sized bathroom. A gray Ikea sofa in the living room could turn into a bed.
Mr Holliday explained that the unit was similar to the ones they built at a complex in Oakland to house previously homeless tenants. Two of these apartments as well as the corridor space between them can travel on the same truck.
Mr. Holliday said one of his big challenges is finding enough workers to meet demand. “The workforce for housing construction is shrinking,” he said. His solution? Hire and train people who otherwise could not find a job. About half of Factory OS unionized workers are “second chance” workers, including about 20% who have served time in prison.
The pandemic has also revealed another downside to building factories: Workers are in relatively close contact indoors. Factory OS now requires all employees to be vaccinated by the end of September.
Although the facades of buildings can be customized, the floor plans of manufactured homes must be consistent. Every studio, for example, should have the same layout to maximize the efficiency of modular construction. Mr Holliday said he doesn’t think it should get in the way of building the homes we need, comparing the innovation of modular housing to the standardization of the suburbs of Levittown, NY, which kicked off the construction of many American suburbs. to house young families after World War II. “We let the design of the buildings get too complicated,” he said.
In the near future, the goal is to further streamline the process by creating even more standardized floor plans and designs that developer clients could essentially choose from a catalog. Factory OS partnered with Autodesk, a company that makes software for engineers and architects, to create interactive building plans that could guide workers as they go, almost like a Google Maps version of a drawing. architectural. It would also overlay data results from previous projects to maximize efficiency.
To avoid the fate of businesses that have grown too quickly, Mr Holliday said he plans to keep his business on the West Coast. surgery. “My hope is that we become a stimulus for the industry,” said Mr. Holliday. “Not that we have created a lot of factories ourselves. “
For weekly email updates on residential real estate news, sign up here. Follow us on twitter: @nytrealestate.