Business
In the summer of 2016, the world’s tallest modular building at 32 stories high was completed at 461 Dean Street in Brooklyn, NY. Once the building’s apartment modules were completed at a factory located in the Brooklyn Navy Yard, they were transported to the development site and essentially stacked one on top of another into a high-rise building. To the dismay of its original backers, the building was delivered years late, riddled with construction problems, and the subject of a costly litigation. Still, excitement about modular construction in New York abounds with new projects under development. Sponsored by: If you’re a startup, apply for DigitalOcean’s Hatch program, where if selected, you’ll have access to their cloud for 12 months, in addition to technical training and mentorship. You can also go to do.co/predictingourfuture and ask the sales team for a free trial. Interviewees Episode Excerpt U.S. Multi-Family Building If you were paying any attention to the 2016 U.S. presidential election, you would think that just about every factory in the United States has either left for China or is about to leave. But when it comes to factories that are currently building apartments, or will soon be building apartments, we’re probably just getting started with constructing these factories in the United States.S hipping costs make transporting building modules from overseas to the United States expensive. And while one Polish company has managed to successfully transport modules here, the transportation expense is likely to make this a predominantly local industry. That, along with undeniable demographic shifts afoot in the United States that will be pushing the demand much higher for multi-family buildings in urban areas, suggest that we may very well witness the transformation of American factory-built construction into a multi-billion dollar industry. Based on what world populations and growth rates suggest, you might think that the urgent need for urban housing over the next 30 years will largely be an African and Asian phenomenon. But the truth is that the migration to cities is also expected to happen right here at home. The United States Census Bureau provides statistics on the number of permits issued for new construction starts each year throughout the entire country. In 2015, 41% of permits were issued for structures that consisted of two or more units (referred to as a “multi-family residence”). Not exactly a screaming validation of my argument that you should be building modular multi-family buildings in cities when 59% of permits were for single-family residences. But let’s look at the trend line towards multi-family construction over the past 25 years. Again, from the United States Census Bureau’s website: In 1991, 21% of permits were for multi-family residences; In 2000, 25% of permits were for multi-family residences; In 2007, 30% of permits were for multi-family residences; And again, in 2015, 41% of permits were for multi-family residences. The rising trend of multi-family starts, as a percentage of total building starts, is unmistakeable. Here’s another interesting set of facts. The U.S. Census Bureau breaks down the multi-family residence into three categories: two units; three and four units; and five units and up: In 1991, 79% of the multi-family category permits were for buildings with five plus units; By 2015, 93% of permits in the multi-family category were for buildings with five plus units. As it turns out, if you’re an entrepreneur and thinking about factory-built housing in the United States, the biggest market to go after today is single-family homes. But if the trend towards urban development continues, the biggest market to attack will soon be for multi-family homes. In New York City, two companies began with a modular approach,