Why you should care
The prefabbers claim to have a solution to the inefficiencies and expenses of homebuilding. And you can have almost anything delivered to your door these days!
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Pooja Bhatia is an OZY editor and writer. She has written for The Wall Street Journal, The New York Times and the Economist, and was once the mango-eating champion of Port-au-Prince.
You can’t buy a house on Amazon.com for self-assembly. Not yet, anyway.
But prefab (or prefabricated) houses, long a modernist fantasy, are having a kind of moment. Over in Brooklyn’s Atlantic Yards, cranes are stacking factory-built modules on top of one another like Legos. When the stacking is done, it’ll be a 32-story apartment complex and the tallest prefab in the world, according to the developer. Prestige architects like David Rockwell (better known for luxury hotels and restaurants) are throwing their hats in the prefab ring, too. And a brash startup called Blu Homes, established in 2008, is spurring envy and some resentment: It has about $150 million in investment, as well as technology that folds glass walls and high ceilings on flatbed trucks — and says it’s already doing more volume than anyone in the prefab business.
It’s way too early to say whether any of these efforts will modernize the homebuilding industry, which relies on old methods and remains fragmented and inefficient. Historically, the prefab dream has ebbed and flowed; at times, cost overruns and impossible promises have turned it into a total nightmare. Even now, the upswing is relative: Blu Homes may be leading the industry, but it’s built fewer than 300 houses in total. (Compare that with the 569,000 homes constructed last year.) And the prefab project in Brooklyn has taken much longer than anticipated.
Still, with housing markets starting to recover, technology making advances and finance markets easing up, prefabbers have more than a few things going for them. They look at waste and inefficiencies in the traditional housing construction market and see “a lot of room for growth,” says Joe Tanney, a prefab guru who is a principal and co-founder of the New York firm Resolution: 4 Architecture. The firm has built about 120 prefab houses over the past decade, from a “Bronx Box” to a Venice beach house. Usual price range: $250 to $350 per square foot. But the firm has built as cheaply as $100 per square foot and as expensively as $800.
Prefab houses are made in factories, shipped in a truck (usually) and assembled on-site. Some customization is fine, but the key is mass production. Think of an assembly line, only for houses. Prefabs already command a sizable portion of the housing industry, including trailer homes. But we’re not talking prefab trailer homes, or IKEA stores (also prefabbed) or even Brooklyn’s very tall apartment complex. Nope!
We’re talking about the “holy grail of modernism.”
That’s Tanney’s phrase, and he uses it to mean the modular, prefab, single-family home. For buyers, prefab promises access to good design, quick builds and fixed costs. For a certain kind of architect, it’s the great white whale: an elusive and sometimes infuriating goal. It would leverage technology into homebuilding — a fragmented industry whose methods have not greatly changed for centuries — and make architect-designed houses accessible to the middle class. “A relatively affordable modern domestic space that could be mass-produced,” Tanney says. It’s utopian.
Prefab lets architects see their work come alive.
The field has long been small, niche and dominated by architects. The most productive firms made maybe 10 houses a year, and each was a work of art. Architects liked prefab not just because of the utopian dream, but because prefabbing gave them control over the construction process, says Laura Steele of Taalman Koch Architecture, an L.A. firm that makes the IT House.
Most architects produce drawings, not buildings — “the end of the process is handing over documents,” says Steele. But prefab lets architects see their work come alive. The firm has made about a house a year for the past decade, alongside traditional projects, but it’s switching its full-time focus to prefab. “We know it’s a successful business model,” says Steele. “The more we do, the more the costs get driven down.”
Among the most prominent observer of prefab housing is Allison Arieff, an early enthusiast whose 2002 book Prefab galvanized interest in the field. But over the years, she says, she’s lost faith in the promise of prefab for architect-designed, single-family homes: The economies of scale just aren’t there. Prefab got popular because “it seemed to suggest you could get a high-end, architect-designed home for less money.” The suggestion was misleading. Instead, she says, “I’ve seen a lot of frustration and a lot of people lose a lot of money.”
But then in 2008, along came Blu Homes, with capital, fancy marketing and a big dream: to deliver on the promise of prefab. To do that, they figured, they needed to put technology, capital and project management — not architecture — at the center. Neither of its principals are architects. That’s deliberate, says one of them, Maura McCarthy. While architects have long gone gaga over the prefab promise, “a lot of the firms can’t really execute,” she argues. Inspiration, theory and “cool design” are great, she says, but “it’s best to have a capital base, a technology base and a business goal.”
That tech base? It’s not just foldable steel, which allows entire houses to be transported on 8.5-foot-wide trucks. It’s also an electronic modeling system. Its customer interface is easy to use, but it translates into factory-floor directives and cost sheets. Blu says that by the end of 2013, it had built some 275 “products.” Cost per house: about $750,000 to $800,000, including site work and installation, but not the land. Blu says it’s profitable on a net, per-home basis, but not yet on a gross basis, which takes into account costs like research and development, and overhead.
And that’s one reason it’s too early to proclaim the death of the great white whale.
This OZY encore was originally published July 21, 2014.