Finding Value in Modular

Customized modular units have the potential to efficiently deliver affordable housing. Avoiding the land mines requires expertise and a willingness to explore all options to meet the community’s and the developer’s larger goals.

Every developer has heard stories about modular housing projects. Too often they launch with high expectations only to dissolve into delays, cost overruns and problematic construction.

It doesn’t have to be that way. Modular systems can deliver affordable housing quickly and more efficiently than traditional building systems. But there are many variations of modular construction, each with its own attributes, which may not always work for a specific project.

Turning modular units into a high-performance, livable development requires expertise, experience and an understanding that modular is not right for every project.

“You have to be able to pivot and capture pricing advantages in one system or the other,” LPA Design Director Matthew Porreca says. “Our design approach is to explore options and try to create the best value out of a project, no matter what system it’s in.”

LPA has designed one of the largest portfolios of steel-frame modular housing in California, including El Cerrito, an eight-story, mixed-use project with 172 supportive housing units for Family Health Centers of San Diego, the largest steel-frame modular project on the West Coast.

On several recent projects, LPA’s expertise has helped navigate issues and find the approach that worked best for the specific projects. In each case, finding value in a modular system required a broad analysis, going beyond the economics of units-per-square-foot to include performance, community connections and the development’s larger goals.

“We’re putting the design emphasis around the placemaking and building community,” says Porreca. “It’s what you develop around the modular that makes a development into a place where people will live and thrive.”

A Focus on Flexibility

Modular is a strategy, a kit in the toolbox, and it’s not always the ultimate answer. A common mistake is getting locked in to modular or a particular modular system, even though conditions may have changed.

A supportive housing development for Bethel African Methodist Church in San Diego started off as modular, but the pandemic changed the financial equation. Construction costs soared 25%. Local building codes had also changed, allowing more units on the small church site. Turning to a traditional stick build allowed the church to build 26 units instead of 16 and save more than $1.6 million in construction costs, according to Bethel AME Church Pastor Harvey Vaughn.

“We were able to build for the price we already had in place,” Vaughn says. “Modular would have saved us six months of construction time, but adding $1.6 million would have knocked us out of the price point for future developments.”

Flexibility is essential in any modular strategy. For the Normandie supportive housing development in Los Angeles — five floors with 75 units — LPA switched modular manufacturers midstream in the design process when supply chain issues raised the cost of the original choice. Even when modular seems like the logical option, LPA designers include traditional framing in the cost and value comparison models.

The analysis of modular system should include location, scale of the project, an understanding of the program, local prevailing wage and insight into the current stage of the construction market, says LPA Director of Mixed-Use Matt Winter. Each element should be studied in detail, to ensure the building strategy fits the budget and programming. Return-on-investment can be found in neighborhood context, biophilic design, public spaces, lower operating costs and the elevated health and wellness of the residents.

“It’s very easy to lose the advantages of the modular system if you start off with an incomplete analysis,” Winter says.

El Cerrito is the result of a strategic engagement with Family Health Centers and the community to develop a plan that uses the nonprofit’s resources wisely. The units sit atop a podium that includes parking and a ground-level health clinic. The fully furnished apartments are clustered around a dog park and a children’s play area, and each building has a rooftop courtyard. Operable windows, vertical sunshades and high-performance systems will help reduce energy use by 86% from an industry baseline. Stormwater is captured on the roof and treated on site through a series of biofiltration landscape beds on the roof decks.

Larger Goals

The issues that can scuttle the economic value of a modular strategy are well documented. Far too often, more on-site construction time is required than initially planned. Unclear permitting and construction responsibilities can cause delays. In many cases, it’s attention to detail that can make the difference in a project’s success.

On every modular project, LPA rigorously searches for ways to standardize components and the design approach. Individual unit types are kept to a minimum, and interiors standardized. Across 172 units, El Cerrito has three unit types, the same bathroom for every single unit type, and two kitchen types. “We’re trying not to push the envelope on the bathrooms and the kitchens,” Porreca says. “It reduces time and labor and allows us to put the design thinking toward adding value in other ways.”

When a new developer took over a struggling housing project in San Diego, LPA was able to remove costs from the modular units by removing extra fenestrations that didn’t provide value, and focused on the true project needs. The development, CoPlace, a collection of market-rate artist lofts, was the first multistory steel modular project completed in San Diego.

“We stripped the project to core design features and turned it into something that was financially feasible,” Winter says.

In Los Angeles, a 75-unit supportive housing project is an example of modular working as part of a larger design. On a tight site, the Normandie development creates efficient unit layouts and supportive program spaces, and maximizes the community spaces. An interior courtyard and a rooftop deck help connect residents to nature. Highly insulated units and natural ventilation help reduce energy use by more than 70% from an industry baseline. Described as “a thoughtful and creative way to address low-income housing” when the AIA-Orange County presented the project with an Honor Award, Normandie creates an easily replicated model for quickly and efficiently delivering high-quality supportive housing.

Normandie is a reminder that modular offers advantages on many levels, depending on the project. Not only can it speed up the construction process, constructing the bulk of the project offsite minimizes disruptions to the neighborhood. Modular also changes the financial equation. Developers typically pay for the modular units up front, reducing construction variances. Some financial institutions are not up to speed on the modular funding framework, but “understanding is growing,” Winter says.

But realizing those advantages involves navigating a mine field of potential disruptions and setbacks. Every project needs to be explored for its own merits, with modular providing the opportunity to efficiently address housing, while creating the opportunity to shift resources to elements that elevate the overall experience and create real return-on-investment.

“These are complex systems,” Winter says. “Our goal is to conceptualize a lean design process to offer clients more choices that potentially add value to their project.”

The key is understanding the potential and challenges of the different modular systems and integrating the best approach into the ultimate program goals. Modular can be a value-adding part of the mix, if used strategically and targeted toward the project’s specific goals.

“Every project has its own unique opportunities to truly create added value, and having modular expertise as part of a holistic design process can unlock a site’s potential for financial success,” Winter says.