Unconventional wisdom: To build utopia, it looks like you should do the nailing off site

Google plans to build 300 modular apartments for workers at its new Mountain View campus near San Francisco, where average rents for a 650-square-foot one bedroom now top $2,250 a month.

I know, I know – that’s a steal if you’re a Long Island renter looking for decent digs along a rail line. But it’s considered an outrage in the Bay Area, where the surge in tech workers is pushing up rental rates by more than 12 percent a year, or four times the national average. The median home price now tops $1 million. No one’s happy.

Unlike our region, where we’ve pretty much shrugged as the millennials shuffled off to find affordable space elsewhere, Bay Area businesses and governments are trying to do something about the crisis. Developers are pitching new housing projects on every conceivable chunk of land and getting mostly greenlights. Municipalities are easing the rules on basement and garage apartments and allowing fill-in construction on forgotten half-lots and vacant corners.

Federal, state and local governments are deeding over unused acreage and negotiating land swaps with builders. The Tiny House movement is doing its part.
The Google apartments, which will run about $30 million, are to be built by Factory OS, a startup run by a mix of affordable housing advocates and veteran developers. The units will be built at a former World War II plant on nearby Mare Island, then assembled at the site of Google’s newest campus, now under construction near its famed Googleplex headquarters.

Factory OS says it can save as much as 40 percent on building costs – even using union labor, which it does – and speed the construction process by months. The units come equipped right down to the toilet paper holders.

They are similar in design to the units in B2, the 32-story prefab apartment tower in Brooklyn – said to be the world’s tallest – that was completed late last year by Forest City Ratner, the Nassau Coliseum and Barclays Center developer. Also built in a World War II factory, this one at the nearby Brooklyn Navy Yard, the units were clicked together on site and sealed by rubber gaskets that look a lot like the ones between subway cars.

Once assembled, the units are stronger, quieter and more energy efficient than a traditional building.

Thanks to construction savings, and government help in securing some of the land through eminent domain, a full half of B2’s 363 units were offered at affordable rates, with the cheapest studio starting at $559 per month. The lottery for the affordable units attracted 84,000 hopefuls.

The Factory OS and Forest City teams make the point that modular apartments don’t represent product innovation, but process innovation. In Brooklyn, for example, the company used teams with multidisciplinary skills, understanding that it takes longer to build a bathroom or kitchen than a living room, and that a straight assembly line would always get bogged down on the plumbing.

In California, the Factory OS team says it can avoid more than 70 percent of traditional construction waste.

So let’s review. The perfect climate for modular development is an over-heated rental market in which the government recognizes the need to liberalize zoning codes and use its own excess land and condemnation rights for the public good.

(If you have a big company willing to get involved, so much the better.)

Cheaper land and construction savings allow the builder to save as much as half the cost of a traditional structure, much of which can be used to subsidize lower rents without hurting the developer’s profit. The building can go up in about two thirds the normal time, further reducing carrying costs.

Unused land gets returned to the tax rolls. Pent-up demand guarantees that the building leases up quickly, providing speedy cash flow.

The millennials come back, jobs are filled and the economy grows. Per capita taxes go down. Services improve. Elected officials look suddenly smart.

It could happen. Maybe even the part about the elected officials.