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The pre-fab skyscraper? Bay Area housing crisis brings new era for modular homes [The Mercury News :: BC-REAL-PREFAB-SKYSCRAPER:SJ]

LATHROP, Calif. - Inside a nondescript warehouse in a nondescript industrial park, workers for RAD Urban are assembling the building blocks of a modern apartment building.

Piece by piece, along a factory line, workers erect walls, string electrical wires, fasten plumbing, hang drywall and paint until a bare 12-foot by 30-foot steel chassis looks almost like a move-in ready apartment.

These almost-finished units will be delivered to an Oakland construction site, then fastened together into full apartments in a five-story complex. Advocates hope the project will also help fuel a renaissance for modular housing.

Once a punch line for developers, a sturdier and improved version of pre-fabricated housing could be making a comeback as Bay Area developers try to speed up construction, cut building costs and add desperately needed housing.

Much like Tesla, its neighbor in the Central Valley industrial park, RAD Urban is trying to revolutionize its industry.

"(We're) really looking to fundamentally change the way we build," said RAD Urban senior vice president Jason Laub. "We can solve that problem on the cost side."

A pricey mix of challenging Bay Area economic realities - high costs for property and materials, few construction workers but many middlemen - make the Bay Area one of the most expensive spots in the country to build.

Proponents of pre-fabricated or modular housing point to studies showing factory-built apartments and buildings can cut construction costs by about 20 percent, and can be built in almost half the time. It's emerging as a small, alternative attack on the housing crisis. RAD Urban and another startup, Factory OS in Vallejo, have set up factories to build modular housing for the Bay Area and beyond.

"It's an old idea with new twists," said Carol Galante, director of the Terner Center for Housing Innovation at UC Berkeley. She cautioned about challenges ahead for a young industry. "This does require a total change of mindset by lenders, by architects, by general contractors."

Terner Center research traces versions of off-site construction back as early as the 1830s. It's been common in Finland, Japan and Sweden for decades as one solution to a short building season, where bad weather could throw a project off several months.

The U.S. has embraced the method in times of great housing need, most prominently after World War II.

In the Bay Area, the need has returned. The Terner Center estimates construction costs grew by at least 25 percent in the Bay Area between 2014 and 2017. Those costs make it hard for developers to get financing and make a profit on middle class housing - a market segment badly neglected in recent new development.

Building off-site and transporting modules to a property can save up to 20 percent of the cost of a three or four-story, wood frame apartment complex. Developers save time by preparing the construction site while the factory is building units.

Builders can squeeze savings from several other steps in the process: lower labor costs, as workers trade lower wages for shorter commutes to factories outside the core Bay Area; lower material costs from factories buying in bulk; and fewer middlemen.

Developers also believe workers are more efficient in a factory, where jobs can be completed sequentially, uninterrupted and with fewer delays.

Jay Bradshaw, director of organizing for the Northern California Carpenters Region Council, has teamed with RAD Urban and Factory OS to provide workers for the plants. "There's a buzz," Bradshaw said. "It's a brand new industry."

Skilled carpenters can see some benefits - stable conditions, a growing industry, and a chance to live close to where they work, Bradshaw said. Many construction workers already live in the Central Valley, forced out of the Bay Area by high housing costs.

Factory construction also opens up more job for women, proponents say, because physical demands can be alleviated by a well-engineered production line.

But startups in the field have had challenges. Modular builder Zeta Communities closed its Sacramento factory in 2016, citing lack of funding and laying off about 100 employees.

Galante said the companies have to convince banks to think differently about financing, and realize that even though factory construction is cheaper in the long run, it requires more upfront costs than traditional building.

More than a few U.S. companies are getting in on the trend. Kasita, a Texas-based startup with a factory in Austin, recently brought a modular house to downtown San Jose as part of a country-wide tour.

The 400-square foot unit - long and narrow, like a traditional modular home - drew hundreds of visitors during its two-day stay, including several developers, Kasita founder and CEO Jeff Wilson said. The unit was tricked out with high-tech amenities, including voice-controlled speakers and electronics. The units can also be stacked, Wilson said, and are ideally used for in-fill urban housing.

RAD Urban sees its niche as large apartment and mixed-use complexes with more than 100 units. It set up its factory in 2013, customizing the space with rails to slide frames between stations, and platforms to allow workers access to the underside of the units so they can add insulation and finish ceilings.

The factory includes 40 work stations, allowing a complete unit with cabinets, sinks and interior finishing, to come off the line in about 20 days.

The steel frames range in width from 10 to 16 feet, and can be 15 to 40 feet long. A typical unit is 360 square feet. Attaching two or three units together make up a one- or two-bedroom apartment.

The units are shipped to the job site by tractor-trailer shortly after they are finished, Laub said. The factory serves the west coast only; longer shipping drives up costs.

The assembly line is a work in progress. Ideally, most tasks would be done at waist-high stations. Some jobs still require ladders, and workers climb and crawl around the units to finish the product.

The units being completed will be shipped to a construction site at 4700 Telegraph Ave. in Oakland. The assembly of the 5-story, 48-apartment and retail complex is scheduled to start in June.

Residents at Garden Village, a completed UC Berkeley project near campus, say the apartments have a modern, sleek feel - and are a big upgrade over other student housing. The apartments have a deck and a rooftop farm where herbs and produce are grown for local restaurants.

"It doesn't feel like it's school housing," said Michelle Reed, a senior. "I'm definitely going to shed a few tears when I move out."

RAD Urban has completed three projects and has two more under construction. The company is also designing two, mixed-use apartment towers in uptown and downtown Oakland. Each tower will have nearly 200 apartments, and will rise 29-stories. The company says they will be the tallest pre-fab apartment buildings in North America.

"We need to produce a lot more housing," Laub said. "This is a very good step."


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