Multi-Housing News - February 2009 - (Page 16)

development & design Make Way For Modular Get five-star quality at a three-star price By Michael Russo, Contributing Editor w With some developers struggling to get projects funded, the resurgence of modular design in the multifamily market couldn’t have come at a better time. Developers, who were once asked to put down 20 percent in equity, are now being asked for far greater commitments, often in the 30-50 percent range. At this end of this spectrum, many of the projects in question are simply not penciling out from a financial perspective. However, by using factory pre-fabrication techniques, developers can save 10-15 percent on total project costs, which is often enough to get a project moving. Modular design techniques can also cut construction time by up to 50 percent. This allows apartment/condo investors and hoteliers to get that initial revenue in the door much quicker, while tying up less money for a shorter period of time. On the downside, some architects feel they’ll lose design flexibility by going with modular construction, and it’s an issue that needs to be addressed. In the interim, the industry needs to get past the notion that today’s modular design techniques have anything in common with the low-cost manufactured housing segment. Memories of Homestead, Fla.-like devastation after Hurricane Andrew due to the use of cheaper, inferior building materials are simply that—a memory. Today’s top modular designers are at the forefront of 3D CAD modeling technology. They are also well aware of the stigma of the manufactured housing market and the importance of keeping the quality up on every project they handle. “Good architectural design is sometimes lacking in the commercial modular industry, but in true modular design it’s not,” says Gary Davenport, AIA, project sales manager for Affordable Structures of Georgia LCC. “The problem is there’s a merging of modular design and what we consider the old portable trailer stuff. That’s the preconception that most people have of modular. True modular has some very good design components, and there are lots of good modular practitioners.” For example, companies like FrameMax of San Diego offer integrated engineering analysis and coordination of mechanical, electrical and plumbing work. Modeling is completed using Autodesk’s Revit platform and framing is designed using Vertex CAD, while software-generated files and shop drawings drive automated roll forming machines to produce all component parts. “We position a quality control person at every key point in our production line,” says Phil Ellis, president and CEO of FrameMax. “On a U.S. construction site, these safeguards are often lacking. And when you consider that we buy direct from the manufacturer, the developer can get a five-star finish at a two- or three-star price.” Indeed, the savings in both labor and materials can be significant when both are sourced directly on a global basis. Gone are the middle men and their margins and the dependence on U.S. supply. Instead, modular design customers often get the best products at the lowest prices. “By providing a superior, five-star product that is still cost-competitive, we hope to dispel any ideas modular may have suffered in the past with poor quality building,” says Ellis. Currently, labor is estimated at 60 percent of the cost of construction in the U.S. multifamily market, with on-site union framers and plumbers getting $50 and $80 per hour, respectively. In contrast, factory fabrication of modular units is much more efficient overall, particularly when the factory and labor pool are located in China or India. “We estimate shipping costs from China to the U.S. at less than $5 per square foot,” says Ellis. “At $120 per square foot for a finished modular project, shipping costs are less than 5 percent of net total cost. That’s next to nothing compared to the labor savings and considering that traditional construction techniques incur freight charges as well.” Modular construction really shines in the bathroom. With 40 percent of labor costs connected to the bath, developers can save big using prefabricated washrooms. The Bathroom Pod from Kullman Offsite Construction in Lebanon, N.J. is being tested in one of multi-housing’s toughest environments in terms of wear-and-tear—student housing. Last July, more than 175 prefabricated modular bath- 16 February 2009 | Multi-Housing News | Official Publication of Multi-Housing World

Table of Contents for the Digital Edition of Multi-Housing News - February 2009

Multi-Housing News - February 2009
Contents
From the Editor
Executive Insight
Perspective
NMHC Washington Outlook
Market Forecast: Gulf Coast
Renovating in a Recession: New Rules
Development & Design: Make Way for Modular
Products: Security
Finance: Structured Financing
Directory: Multi-Housing Finance Providers
Technology: Utility Management

Multi-Housing News - February 2009