Housing factories are spreading across the West, and one is shipping to Colorado

Adam Berger has spent most of his career developing real estate, but it was his stint running an e-commerce business that sparked his interest in applying technology to homebuilding.

The key was finding the right tech.

He found what he was looking for in the North Dakota oil patch. There, where the building season is short and the demand for housing is deep, modular construction is part of the fabric. Home segments are built in factories, trucked to a development site and put into place, saving time and ensuring quality.

Now Berger is working to finish his second factory-built duplex on North Alton Street in Aurora. The designs are his own, built in a factory in Nebraska. The first duplex went from groundbreaking to completion in less than four months. This time around, he expects to complete construction in around two months.

“This tech has been out there. It’s how it’s been applied,” Berger said of modular home construction. His duplexes are selling at market rates — $429,000 and up for three bedrooms and 2.5 baths in 1,765 square feet — but he is looking at ways to put them to use creating affordable housing in a metro area starving for it.

“(Affordable housing) is such a monumental crisis right now that we need to find ways to disrupt it, to change the way it’s been done to build more of it,” he said.

Berger is not alone. At Housing Colorado’s NOW! annual conference in Vail last week, Daniel Gehman, of Humphreys & Partners Architects, discussed how gobs of new apartments are coming together on the West Coast using components built in domestic and overseas factories, driven by high housing costs.

“People are protesting in the streets (over housing prices). We still deliver housing the way it was done in the 19th century,” Gehman said at the conference. “Off-site fabrication in general … could disrupt the whole supply chain.”

Prefabricated design grabbed some attention in the U.S. with the advent of the shipping-container house, including in Denver. But the shipping-container concept hasn’t scaled well, Gehman said, because the metal boxes are hard to retrofit.

Instead, a growing number of American developers are embracing the track Berger is on: designing houses or apartment-building segments that show up on site with surfaces, appliances and fixtures in place. Once workers have laid the foundation and prepared water and electrical hookups, a crane hoists the wood-frame or steel modules. Workers then complete connections, smooth over contact points and, in some cases, apply exterior skins and other extra work.

“It just flies up,” Gehman said of the process. “It’s like a magic trick.”

Examples of that magic dot Colorado’s mountain communities. In Georgetown, developer Kurt Soukup’s Bighorn Crossing project broke ground in May. He expects 25 of his factory-built townhomes to be completed by the end of the year. Soukup is working with Denver-based 359 Design on the development. The company was also involved in the Chamonix project in Vail.

Hyoung Chang, The Denver PostThe crane taking four 15-foot-wide by 60-foot-long modular home segments and stacking them one on top of the other to make a new duplex. August 23 2018. Adam Berger, a developer with his own modular home designs, has sold his first duplex in North Aurora. Now he is using a crane to hoist the four trailer-delivered units for his second duplex into place.

The industry is growing: Prefab Logic CEO Curtis Fletcher counts around 14 fabricators in the U.S., including one in Nebraska and others spread across Idaho, California’s Bay Area and Canada. And there are 15 more potential manufacturers in the “pipeline,” Fletcher said. One California-based company has raised more than $1 billion from investors, The New York Times reported.

In one case, a developer cut a 50-unit apartment project down from 430 days to 280 days, according to the panelists. Larger modular projects have included more than 400 units.

But you won’t see much modular work along the Front Range yet. Outside of Vail — and one notable example in Denver’s Berkeley neighborhood — large prefabricated buildings remain rare in Colorado. That may be because housing costs aren’t high enough for developers to start experimenting yet.

“It’s just starting to get to the tipping point,” Fletcher said of housing prices. There’s interest, he said, but not enough to kickstart a factory that could cost from $30 million to more than $100 million.

If and when modular construction does kick into high gear locally, there will be hurdles. Permitting and inspections could get complicated for larger projects (currently the state handles inspections) and applications of architectural and design guidelines could be sticking points.

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Berger points to another barrier: stigma. For many people, the phrase modular home evokes images of mobile home parks. After all, his business was inspired in part by a friend’s work with mobile homes in the northeast part of the state.

In Aurora, the City Council isn’t worried about perception, it’s worried about preserving affordable housing. That’s why it voted to enact a temporary moratorium on the redevelopment of mobile home parks earlier this year.

Mayor Bob LeGare, a former mobile home owner, isn’t familiar with Berger or his aims to create affordable housing using modular construction. But he likes the concept.

“With the labor shortage and the weather challenges, I think it’s a great way to build affordability into the market,” LeGare said. “Land affordability is the next issue.”

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