Modular proves viable for multifamily: Case studies look at ideal scenarios for affordable and market-rate builds By David Amundson and John Kately, project executives at C.W. Driver Companies
Multifamily is in high demand, from both the investor and consumer standpoint. Sales have returned to pre-pandemic levels as investors leverage low-interest rates and are buoyed by rent increases and low vacancy rates. Renters, especially those seeking affordable or workforce housing, are limited in options, and new supply is greatly needed. In order to close the housing gap in California, 3.5 million homes need to be built between 2020-2025.
Apart from high land cost and zoning restrictions, current supply chain issues, rising material costs and labor shortages are pushing interest in alternative construction methods.
At first glance, volumetric modular construction offers many benefits, including speed-to-market, cost savings and predictability. However, developers remain hesitant and risk-averse due to the method’s infancy, especially in Southern California.
C.W. Driver Companies, a premier builder serving California since 1919, has been at the forefront of modular construction, laying the groundwork to instill confidence in the delivery method. By conducting in-depth interviews with national and international modular construction firms, the team has been able to conduct a benefit analysis and apply the methodologies to current and upcoming builds. With the efficiencies that come from the assembly-line prefabrication, modular has the potential to skyrocket into a major player over the next decade.
Optimization Studies
Thought leaders at C.W. Driver Cos. created two award-winning case studies to demonstrate the potential time and cost savings for both an affordable and market-rate scenario. The studies were a collaboration with Optimum Modular Solutions, Englekirk, Steinberg Hart and KTGY. The team prepared a conceptual design, ROM budget and schedule for both a steel volumetric modular system and a conventional Type III construction in order to compare and contrast the details. Both case studies assumed the use of double-loaded corridor modules, concrete cores utilized to carry lateral loads, prefabricated roof modules and a portion of the exterior façade system installed on site. Onsite costs, building codes and seismic requirements assumed a typically sized downtown Los Angeles, California site with minimal demolition requirements.
The results were favorable. The affordable housing case study accounted for seven stories of residential over the concrete podium level. The design maximized efficiencies with 154 one-bedroom units with 22 on each floor and basic amenity spaces. Cost savings in this scenario were 13% ($29.6 million vs. $34.2 million) with speed-to-market savings at 25% (down to 12 months from 16 for a conventional build.) The revenue captured by saving four months from the compressed construction schedule would have been over $1 million.
The market-rate housing case study was developed for the “missing middle” demographic rather than the usual luxury complexes. This design allowed for six stories of residential over the concrete podium. It included four floorplans (junior, one-bedroom and two bedroom, two bath), with a varying number of units on each level. Amenities included pools on multiple levels, a courtyard and a roof deck. The speed-to-market was reduced by 27%, reducing the construction schedule from 22 months to 16 months. Cost savings were 13% ($92.6 million vs. $106 million), and the revenue captured from the compressed schedule was over $4 million.
Both case studies proved that in an ideal scenario, significant time and cost savings can be realized through modular construction. Looking more closely at reality and taking into consideration current limitations, the real benefits lie in speed-to-market, enabling developers to start earning revenue several months sooner on rents. Cost savings come from about a 20% reduction in prevailing wage costs, but that is usually canceled out by shipping costs.
Projects in Progress
Modular construction has been utilized to address the need for transitional housing and support Los Angeles’ chronically homeless. Developed by Aedis Real Estate Group, Hope on Hyde Park is a 60,000 square-foot, five-story residential community located on a .49-acre site. The building is constructed from locally fabricated building units and comprised of 184steel modular units for 96 apartments. All furniture, fixtures and equipment are installed offsite with a modern design that includes contemporary furniture and floor-to-ceiling windows. Completing in summer 2022, the project’s goal is to serve as a replicable model that helps deliver housing quicker and more efficiently to communities in need.
C.W. Driver Cos. is also in the preconstruction phase of 3rd & Spring Street, a 220,160 square-foot, mixed-use project in downtown Los Angeles. At 15 stories, this project pushes the boundaries for what steel volumetric modular can do. The residential portion will include 266 one-bedroom and 65 two-bedroom market-rate units, with 37 units reserved for very low-income households. The design also calls for a U-shaped portion that opens around an internal, open-sky courtyard, in addition to retail space and 23,500 square feet of open amenity space.Modular proves viable for multifamily: Case studies look at ideal scenarios for affordable and market-rate builds By David Amundson and John Kately, project executives at C.W. Driver Companies C.W. Driver Cos. is also in the preconstruction phase of 3rd & Spring Street, a 220,160 square-foot, mixed-use project in downtown Los Angeles. At 15 stories, this project pushes the boundaries for what steel volumetric modular can do. The residential portion will include 266 one-bedroom and 65 two-bedroom market-rate units, with 37 units reserved for very low-income households. The design also calls for a U-shaped portion that opens around an internal, open-sky courtyard, in addition to retail space and 23,500 square feet of open amenity space.
Lessons from the Field
The modular approach requires a mentality shift as many of the decisions need to be made upfront, rather than midway through construction. Still considered by many to be in its infancy, builders and manufacturers are pushing the boundaries, developing lessons learned, and evolving the process to maximize the efficiencies and benefits.
The most important piece of advice is to determine modular as the type of construction from the project outset rather than work backward to adjust a conventional build to meet the constraints of modular once the project has begun. The modular design and building design need to be done in tandem, as the units of the project are being built in the factory while the building’s site utilities and foundation are being constructed at the site.
Similarly, the developer should assemble a disciplined and experienced team that includes the architect, contractor and modular manufacturer. By integrating the roles from the outset, design, manufacturing and operations can be optimized for efficiency and ensure a smooth project flow.
Preconstruction can make or break a modular project, and it’s the role of the contractor to set up the coordination, logistics, schedule, cost control, utilities coordination and phasing to ensure smooth delivery and bring value to the job.
Not every project is suitable for modular construction, and it’s important to take site location, transportation, weather conditions, storage of modular units and the space for a crane into consideration. However, with the right team in place and a thorough assessment of the opportunity, modular can deliver the benefits of speed-to-market, predictability and quality control, making it a viable option we will see more of in the future.
Modular proves viable for multifamily: Case studies look at ideal scenarios for affordable and market-rate builds
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