New Pre-Fab Custom Housing Product Rethinks MF Construction

By Barbra Murray, Contributing Editor

Seattle–Modular construction, a more cost-efficient building method that has become increasingly popular over the last few years, certainly has its advantages, but it appears that Sustainable Living Innovations, a new custom multifamily housing product developed by the architectural firm of CollinsWoerman, may very well have even more rewards. Who says? So say the 300-plus multifamily industry players, media representatives and regular Joes who recently took a tour of full-scale model units on Lander St. in Seattle that, as per CollinsWoerman, constituted “a true look at the future of multifamily urban housing.”

CollinsWoerman partnered with well-respected real estate development industry entities McKinstry Construction Corp., Lydig Construction and DCI Engineers to develop SLI for steel and concrete multifamily structures. The stance of the masterminds behind the housing construction system can be put in a nutshell: To quote the intro to the popular 1970s Bionic Man television series, with SLI, multifamily properties can be built “better, stronger, faster.”

“We’re an erector set,” Arlan Collins, principal with CollinsWoerman, tells MHN. “We have parts pre-built to our specifications elsewhere, and they go directly to the construction site.” The product, like modular products, goes through the development process miles away from where the apartment community will sprout up and then makes the journey to the construction location, thus shortening the construction schedule and saving on labor costs. But that is about where the similarities between SLI and modular construction end.

First off, SLI is the only pre-fabricated housing product system available that can be utilized for buildings above the mid-rise level. And then there is the delivery issue. Modular construction calls for various items to be shipped to a warehouse where large parts of a building are put together and then carted off to the construction site. However, with SLI housing, components are designed to specifications and then shipped from their various production locations straight to the construction address. SLI generates comparative savings on road time, and resulting gas emissions. CollinsWoerman is, after all, a green devotee.

“Our strategy is components,” Collins says. “We have a half dozen companies that are building components in several different places, and that also means that we have no huge investment in manufacturing plants and equipment; we’re using the market to provide parts. We’re designing a building that can be built with a kit of parts, as opposed to building rooms or large segments of a building that will be moved to the site.” Acoustically insulated walls are constructed with all the finishes and necessary infrastructure–plumbing and wiring are in place and ready to go–and arrive at the designated location, ready for workers to erect. “They’re shipping rooms. We’re shipping walls, windows and steel so we can put a lot of stuff on one truck. With modular construction, if you have a 100-unit building, you will have 100 truck trips, so there’s a lot more shipping costs, and you have to ship it twice; first the supplies go to the manufacturing plant and then they go to the construction site.”

Compared to traditional construction methods, SLI eliminates 50 percent of the total labor required to build a structure and 65 to 70 percent of the onsite labor activity.

Additionally, while modular products are for wood structures, the SLI system is designed for steel and concrete facilities, which are more appropriate for dense, urban housing settings, thereby giving SLI another edge, as the need for housing in such environments is on the rise. “Modular doesn’t fit everywhere/ It doesn’t fit in constrained spaces,” he says. “Also, steel and concrete construction is much more sustainable because it has twice the lifespan of wood.”

Cutting expenses and cutting delivery schedules, CollinsWoerman’s invention is timely. With economic difficulties and job losses having hindered the formation of new households, the multifamily market did not escape the ravages of the recession. However, it is rebounding faster than any other commercial real estate sector. But supply is restricted. Once the credit markets froze and demand took a nosedive after the glory days of 2007 when lenders were doling out financing like candy to kids, developers curtailed their construction activities. Now, they are in a hurry to construct product to accommodate a call for apartments properties–from affordable to upscale–that is growing louder and louder. In 2011, the national apartment market is on track to experience the first comprehensive decrease in vacancy rates since at least 1990, according to a report by Marcus & Millichap Real Estate Investment Services. In addition to job growth, the post-recession release of pent-up demand, lower renter turnover rates and declining homeownership are spurring the fast and strong apartment market recovery.

CollinsWoerman saw the market transformation coming back when almost everyone else in the multifamily industry was running for cover. “We began working on SLI two and a half years ago, right after Lehman Brothers went bankrupt,” Collins recalls. “We started thinking that this is no ordinary recession, that this would be a sea change in the market, and we thought it would be a great time to look at the housing problem.” The problem, he notes, was that that design/build industry had not been taking advantage of the fact that the process of multifamily development–not the developments themselves, but the process–is repetitive. “They treated it as if it was custom.”

Customizing any large process eats up time, and as Collins points out, multifamily development endeavors traditionally require approximately three years, from notion to completion, to realize. It was with this thought in mind that SLI began to evolve. “We thought the first thing we need to be able to do is decrease that to half the time, and do it within the same economic cycle that you launched the project in. We thought we should decrease it 50 percent; do the designing and building in 18 months rather than 36 months. That is a much better investment because who knows what’s going to be happening in three years?”

In addition to cost savings and speed being main factors in the SLI concept, premier quality was also of the utmost importance to CollinsWoerman and partners. “The next big driver was we wanted to build a steel and concrete, hotel-quality building but at a price point that would be competitive in the market, which consists of wood developments,” he says. “The last piece in the trifecta is that each building is customized to each market. A developer can choose the floor-to-ceiling heights depending on the environment, as opposed to modular, which cannot change floor heights. SLI is a kit of parts, but even the parts are custom. Modular does not fit in markets where you want higher finishes, higher ceilings.”

Essentially, SLI presents a certain amount of flexibility. SLI can provide, for example, a unit with 35 feet of floor-to-ceiling glass, where a comparable modular-built unit would offer only a 16- to 18-foot window wall with small windows. More windows and bigger windows equal additional natural light and less energy consumption. “Modular units are deep with few windows and little natural light, but we’ve taken that space and rotated it, so we can get floor-to-ceiling windows because of the way the building is organized and the way the walls work.” It is a consequence of building walls and transporting them, versus building rooms and transporting them.”

It all boils down to a shorter development timeline that allows for a faster lease-up and lower carrying costs coupled with greater asset performance and higher asset value.

The end result of CollinsWoerman et al’s planning, consulting, configuring and construction is, judging by visitors’ reaction to the home models recently presented at the SLI’s preview event, undeniably noteworthy. “The good news is, people really loved the space,” Collins recounts. “It was gratifying for people of all ages from all walks of life to say, ‘Wow.’ People were astounded at the quality, and they couldn’t tell that it was built differently. A space that everybody falls in love with is going to do well in the market. It’s a real game-changer, the fact that everyone loves the space. It’s a real vote of confidence, and there is a high probability that people will eat it up once it gets to the market.”

SLI will hit the market in a very tangible way in the near future. “We have a lot of interest,” he says. “We have done test fits on 50 projects, in terms of how many units will fit and how they will look. There are a dozen projects being priced and there are two to three projects where we are in final negotiations.” CollinsWoerman anticipates that the first multifamily property utilizing SLI will get underway by the end of this summer.

As for SLI’s viability beyond Washington State, the outlook is quite positive. Some of the test fits have even been conducted from CollinsWoerman’s East Coast office. “We intend to bring SLI to the market nationally, and there’s probably an international market for what we’re doing, but we’ll start with North America and work our way from there.”