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Component Manufacturing dverti$er
Don’t Forget! You Saw it in the
Adverti$er
June 2020 #12251 Page #94
Modular Industry in Best Position to Take Over Mid-Rise Housing By Gary Fleisher
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ince 2010, the number of households that rent has grown from 32% to 36% with the addition of 4,000,000 new renters. Mid and high-income renters saw the biggest increase.
With construction slowing down due to COVID-19 and lawmakers debating the pros and cons of rent forgiveness for those who lost their jobs during the crisis, rental housing developers are starting to play a wait-and-see game before building new projects. Many housing developers already own the land they were prepared to build on which is some advantage and renters continue to cluster near public transportation and services to avoid having to own cars, the land available will continue to be more scarce and expensive. The push for lower rental affordable housing will continue to be as allusive as the pot of gold at the end of the rainbow. Land prices and more restrictive regulations will push the raw land costs higher and higher. Adding to the affordability problem after the COVID-19 crisis are the continuing shortage of skilled labor and climbing material costs. The question then becomes how will housing developers meet the need for more rental housing when this crisis abates. One answer is building more units per project. Today, more than 65% of affordable housing projects are large projects of 5 over 1, 50–200-unit types. These can be built more economically than any other type of affordable housing project coming in between $150–$225 per sq. ft. Many stick-built, mid-rise projects across the country are stalled as labor shortages and strict local labor requirements drive construction costs above $250 per square foot without corresponding increases in rents. This is where modular construction steps in to be the ideal way to build these projects. I am continually surprised that many land developers still have not investigated converting their new projects to modular. Instead, they choose to look for subcontractors from within a dwindling supply, buy materials at market pricing and have all the parts and pieces delivered directly to the jobsite, and watch as their projected finish date keeps slipping further into the future costing them thousands of dollars a day. Continued next page
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