May 15, 2024 • 27 mins
Shipping containers are a module that we have been working with for years and has led us to now being not only prepared but experts in modular construction housing.
In this episode Breck, Jill, and Leslie sit down to discuss the role modular construction has on the future of housing and how TSI is already one step ahead when it comes to providing modular solutions.
They also talk about why developers should be exploring this type of construction, and why off site work can not only be better quality, but save time and money.
Here's what you'll learn:
- Why modular makes sense
- Our experience with modular design
- Benefits of building homes in factories
- Why developers should be considering modular construction
Listen to Breck's WDETV Interview here (last 12 minutes)
Full show notes
Ready to move forward with your project? Contact us here and we will put you in contact with the right member of our team.
Make sure to follow us on Instagram, Facebook, and LinkedInto stay up to date on new project releases, trainings, and more.
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Episode Transcript
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SPEAKER_01 (00:02):
Welcome to the Innovative Real Estate Podcast
with your hosts Leslie Horn,Brett Crandall, and Claire
Olilla.
We're here to make your lifeeasier as a real estate
developer and teach youeverything we've learned about
designing and buildinginnovative homes, multifamily,
and mixed-use structures.
On this podcast, we'll be givingyou our best advice, trainings,
(00:23):
and QA segments so you can learnfrom our years of experience and
make your innovative vision areality.
SPEAKER_00 (00:31):
Welcome back to the Innovative Real Estate Podcast.
We are your host, Three SquaredInc.
today, based out of Detroit andHawaii, because Leslie's on a
little uh work cation there.
Um today we are going to betalking about uh modular
construction, which is a topicthat we've brought up a couple
of times uh on a variety ofepisodes.
(00:52):
But the reason why we're talkingabout it today is because, well,
we've been working with modules,Shiba containers, since the
beginning, and we're gonnahighlight how there's so many
overlaps between cargoarchitecture and modular
construction in general.
Before we get into it, uhLeslie's gonna highlight a
couple of recent events that wehave been involved with.
Leslie, take her away.
SPEAKER_03 (01:13):
Yeah, no, thanks, Breck.
And um, I know that as a firm,as an architectural firm,
oftentimes, you know, we getasked to, you know, talk to some
groups and other things, butI'll say lately Breck has been
on fire.
Uh, just the other night wasasked to come back to WDTV uh
(01:34):
and discuss some of thehappenings going on in in our
neck of the woods foraffordability.
And Breck, the reason I wantedto highlight this, in addition
to being on a panel at the FortWayne um Innovative Summit, it
was uh in Fort Wayne, there'sfour houses, just for context,
everybody, there's four housesthat are being built and
(01:55):
supported by the city.
J.T.
King, who's been on our podcast,is the developer on this, and
he's working really close withthe city of Fort Wayne to create
these four models.
And Three Squared has uhdesigned along with home two of
these models.
And I think it's really relevantnot to talk about a specific
(02:15):
project, but given today'stopic, really highlighting the
conversation about why modularmakes sense and also bridging
the gap between what 3Squartshave been doing from day one in
a modular design process.
(02:35):
And I think your conversations Ithink the reason you're being
asked to come on stage to talkand to address these, it's
because first and foremost,Three Squared's doing it.
Uh, and secondly, it is sorelevant to today's economy and
to today's you know, lack ofaffordable and attainable
(02:57):
housing, missing middle,whatever you want to call it,
there is a lack of housing.
And I believe under yourleadership and your design
prowess, the actual affordableand attainable housing module is
really where it needs to be.
And so I wanted to talk aboutthat.
We're gonna put in links to toat least the the WD uh E T V W D
(03:22):
E T.
W D E T T V.
The the the it's a actually, youknow, I didn't realize they even
have that on NPR, but I listenedto it yet from what you shared
yesterday.
And man, it was simple, it wasvery succinct, uh, and actually
uh it brought a lot of clarity.
I think I think our listenerswill really like that if they
want to spend another 10, 12minutes listening to that
(03:42):
interview.
It was really, it was reallycapturing.
Thank you.
So that's what I wanted tohighlight.
SPEAKER_00 (03:52):
And then yeah, that was that was a great opportunity
to to get on the radio and to tochat with local host Nick
Austin.
Great dude.
Um, for whatever reason, helikes us and keeps calling us
back.
Uh, as it pertains to theinnovative housing summit, uh, I
thought I was gonna talk in apanel discussion to like 30
people and uh Scott Shaw and Iboth presented to represent
(04:12):
Three Squared and Home.
And we showed up and there's aroom of 650 people, and they put
us on a main stage right infront of it.
You know, we both thrive in thatenvironment, so it was a lot of
fun.
But you know, we were on thatpanel with two other innovative
housing solutions.
Um, so we got to actuallypresent as like a group of four
panelists, each representing adifferent housing solution.
(04:34):
Because yeah, our team's doing alot, Leslie, but it takes an
army, and the shortage ofhousing isn't gonna be solved by
any one group or any onesolution.
I think we all need to bebanging on all cylinders to be
able to figure this out at scaleat large.
We we just need housing, period.
SPEAKER_03 (04:51):
Yes.
SPEAKER_00 (04:51):
On that note, the future of housing will be
modular housing.
You could disagree with me allyou want, but I'm sorry you're
gonna lose this argument.
It's how the building industryis heading.
If you've built anything, ifyou've seen construction, if
you've talked to anybody,building costs are going through
the roof.
There's a shortage of laborers,we need housing solutions.
(05:15):
And if you look to historically,Europe's always like a decade
ahead of us when it comes tobuilding solutions.
They've been doing modular fordecades.
All right, they've been doingthis since like you could track
these back to the 40s wherethey've been putting concrete
modules in most of Europe,starting in Germany, uh and
Japan's been doing this forever.
(05:36):
So there's a whole area of Asiathat's been building modular
forever, and it's still like arelatively new thing in the
United States, uh, that a lot ofpeople are apprehensive to.
Part of that, and we'll get intoit, was a little bit of the red
tape around that scenario andhow it's characterized, which I
know we've talked about atlength on other episodes.
But I do just want to prefacethe conversation with we're
(05:58):
heading towards modular becausemodular offers you a solution
where you're doing more off-siteand less on-site.
Because the time you spendswinging hammers on a job site,
as we know, time is money.
And if we're going to reducecosts of buildings, that means
we have to build where labor ischeaper and we have to do it in
a more efficient manner.
(06:18):
And why do we build cars the waythat Henry Ford changed us to
build cars?
Because if you were to take allof the pieces and send all the
pieces to a garage and thenassemble the car there, it
wouldn't make as much sense asif it came off an assembly line.
What a novel concept they hadthat buildings have just uh, I
guess, never wanting to uh adoptthat form of construction.
(06:45):
But that's where we're heading.
Uh, we will bake, we'll makebuildings more akin to the way
that we build automobiles,aircrafts, just about every
product that you use in afactory setting.
And then we'll deliver that tothe job site.
Leslie, any thoughts you'd liketo add on top of that before I
continue diving in?
SPEAKER_03 (07:03):
No, I think I mean, I uh uh no, I mean, you're
you're on target, and it'sinteresting because ever since
we started with cargoarchitecture, and this is even
you know, like in 2008 when wesaw the the methodology in
Amsterdam, right?
Because you're right, Europe hadbeen doing it in 2000 and when
(07:23):
we learned about it in 2007 andeight, Amsterdam had already
been doing it for over 10 years.
I mean, like Europe is just soleaps and bounds ahead of us.
And one of the key elements isoff-site work.
So that's the key.
I mean, that's part of it.
No delays, it's all done in asafe setting, a controlled
setting.
You can order all the materialsin super big, you know, bulk.
(07:47):
So I it's it's the right pathfor us to take.
Keep on going.
Thank you.
I just wanted to add that, butthis is this has been happening
for decades.
You're right.
SPEAKER_00 (07:57):
So obviously, we've done work with shipping
containers, got 30 plusbuildings under our belts, but
we're also working with a numberof other materials.
We're we're architects, so wehave to follow the trends and we
have to educate ourselvesconstantly on the up and coming.
And we're constantly learning.
If you have ever gone a daywithout learning something, uh,
(08:17):
as we like to say on this team,you've wasted a day.
So our experience with shippingcontainers has taught us a whole
lot.
And let me give you a briefhistory uh on why that is.
It's because shipping containersare a ubiquitous module that
have been accepted by everysingle country around the globe.
They're one of the few objectsthat can be received and sent
(08:41):
virtually anywhere on theplanet.
And now you think about them.
I'm gonna give you what's calledthe Bader-Meinhofer effect,
where now that I've talked aboutshipping containers, you're
gonna be on your drive home andyou're not gonna be able to get
home without seeing a shippingcontainer.
And then you'll start noticingthem everywhere.
You'll see them on the road,you'll see them as storage
units, you'll see them instacks, by the freeway, all over
(09:01):
the place, in buildings,wherever.
And that's because they areeverywhere.
They are how everything in yourlife got to where you are,
essentially.
I'm talking like look aroundyou.
You see a pencil, a pen, aplant, a lamp, like all of these
things probably were shipped toyou from their point of origin
to the United States, taken intoa port, and then unloaded.
(09:23):
So the module of a shippingcontainer dictates a lot of the
built environment that we usefor transportation.
Why are bridge heights theheights that they are?
Because a shipping containerwould hit them if they were any
lower.
Road widths, uh, the chassis oftrucks on the back of semis, uh,
the ships that are used, whichthen dictate the widths of locks
(09:45):
because these container shipshave to like it, just goes on
and on and on.
And that dimension is eight feetwide, 40 feet long, and eight
and a half to nine and a halffeet tall.
Okay, and so that's whatdictates a lot of our built
environment.
So if you're building modular,and when I say modular, we'll
get into the definition of that.
But if you're building in chunksoff-site and bringing that to
(10:07):
the job site, chances are you'reprobably gonna be working close
to that module.
You know, sometimes they're alittle bit wider, a little bit
longer, but all in all, you'reworking with a very similar
rectilinear shape of a shippingcontainer because the whole
world is meant to move thoseobjects, right?
So whether you're building yourmodules out of wood, steel,
(10:27):
concrete, foam, it's gonna besimilar to a shipping container.
So when we say that we've donework with shipping containers,
you can roll your eyes, youcould tell me it's silly, you
could tell me it's not gonnasave any money or time, and we
could talk about it.
We've learned a lot of lessonsover the years, and there's
great stuff about them, andthere's challenges about them.
But what I want to focus on isthe fact that because I am so
(10:50):
comfortable with that module ofa shipping container as a
building element, and becauseour team has been working with
them for over a decade now, weknow how to do modular
construction full stop, right?
Because it's all one and thesame when you think about it,
when you back up and think aboutit.
There are intricacies aboutshipping containers, but what I
(11:11):
what I'm trying to say is likethere's so many overlaps to
modular construction that if youare looking into modular
building, we could be ofservice.
So let's define modularconstruction and what actually
sets that apart from asite-built construction and some
of the challenges with the redtape.
So, Jill, our lovely projectmanager here at Three Squared
Inc., and the one who isdirecting a lot of behind the
(11:34):
scenes efforts and thelogistical coordination on these
projects.
Jill, could you define for ourlisteners what the difference is
with modular construction versussite construction and some of
the challenges and approvals formodular construction?
SPEAKER_02 (11:46):
Yeah, I think the biggest difference in modular
construction is the there aretypically state level approvals
that you need in order toconstruct that way.
And then there are additionalinspections that are required.
So you're going to have aninspection that's going to have
to happen at your facility whenyour walls are still open.
So you can't close in becauseyou still have to be able to get
(12:07):
access to your mechanicalelectrical plumbing systems for
those inspections to pass.
And then you typically also needan inspection once you bring
those modules modulars to yourjob site.
On-site construction is exactlythat.
Everything that needs to happenon the site is going to happen
on the job site to get yourbuilding built from the ground
(12:28):
all the way up.
So I think another hugedifference there in modular
construction, you're always in acontrolled environment.
The temperature is consistent,the work hours are consistent,
you don't have weather delaysthat you're going to see on a
job site.
So those are some of the mainfactors that allow you to take
full advantage of modularconstruction technologies
(12:49):
because you're not going to befaced with all of these delays
that you might see on a job sitewhen you're exposed to all of
the elements and you have likecertain time periods that aren't
ideal to build.
It doesn't matter what time ofthe month you're building when
you're building modularly.
The state level approvals,typically you have to work with
(13:10):
certain contacts that have thoseapprovals in order to get you to
move forward.
So we kind of know that processand know how to get you through
the modular process, but we alsoknow how to get you through the
building on site.
And what we're saying is thatit's just looking more and more
feasible to get your projectbuilt off-site because there's
many more advantages.
(13:31):
And that's how the future ofconstruction is, and we're here
for it.
SPEAKER_00 (13:35):
So, simply stated, the difference between modular
and site built is that yourmodules that are coming to the
construction site haveeverything in them.
They've been plumbed, they haveyour mechanical units, they have
wires in them.
Oftentimes they have doors andwindows, and your interior and
exterior finishes.
Like it's a finished building.
They say plug and play a lot,right?
(13:56):
Like obviously, there's alwayssomething that has to happen on
the job site.
You have to run water to it andmake sure your waste goes
somewhere.
You have to run electrical powerlines to it, and you have to
have foundations to set them on.
But increasingly, we see modulesuh for construction like this
that actually have the roofsattached to them.
Now they're really awesomesolutions where some of these
roofs go between two modules andthey like flip down after you've
(14:19):
set the module in place.
There's a lot of solutionsthere, and we're going to
continue to get there.
The problem that Jill isspeaking to is that we live in a
country that is actually like50, like 54 countries and
counting.
And then every city in each ofthose states have their own set
(14:39):
of rules.
And so when you get a buildingapproved in your local
municipality, it's going to bedifferent in Detroit than it is
in Fort Lauderdale, Florida.
Some of these are easier andmore lax.
Some of them are very, verystrict and have a lot more hoops
to jump through and a lot morered tape, depending on where you
are in this great country.
And so they have yet toestablish blanket rules for
(15:02):
things that are built in afactory.
Because of what if one factory,for instance, in Denver,
Colorado, is shipping buildingsto the rest of the continental
United States?
Like, okay, how do we get thatapproved?
And what Jill's referring to isthe people that approve those
have to go to where the buildingis being built and approve it
there, which is just a differentprocess.
(15:23):
So again, we're we're playing alittle bit of catch up.
There, there will eventually befederal legislation that will
allow modular constructionacross all of North America,
just like we have building codesthat apply to all of North
America at once, because we havesimilar conditions, we have
similar rules.
But until we get there, we haveto navigate through the red
(15:44):
tape, which is often the biggestchallenge in this industry.
And that's where we come in.
That's where we help, is becausewe have those connections, we
have those contacts.
It doesn't matter who yourmodular builder is, your modular
builder still needs an architectto put plans together.
They're just architecting withinthe confines of their modules.
And everybody has slightdifferences to their modules.
(16:06):
But again, I'll point back tothose modulars are going to be
strikingly similar to the size,shape, weight, and dimensions of
a Shiva container.
So you give me a modularbuilding solution.
We can work with that as anarchitecture firm and design it
because there's still a lot ofdesign.
Like you can have modules thatcould be very blandly dressed
(16:26):
just to get it done, or youcould have a little bit of fun
with it.
It's the way you position them,it's the way you lay out the
entire development, the way yourespond to the site's context.
All of that can still bedesigned within a modular
provider's modules.
And then you put the designtogether, and then we have to go
through the approval process.
And depending on where thatmanufacturer is coming from, and
(16:49):
it might not even be in theUnited States.
We're currently working with uhwith modular providers that are
in other countries and evenoverseas.
Like those are possiblesolutions.
Because, as Joe and Leslie bothstated, building it in a factory
is a huge benefit because youcan buy in bulk.
(17:10):
Why are things so much cheaperat Costco and at IKEA?
It's because they're buying inquantities of millions, not in
dozens.
So you're getting bulk pricingon materials.
All of your tools are there.
They're all connected to thepower.
There's no running generatorsout there, there's no temporary
power solutions.
(17:31):
Everything you need is at yourfingertips in order to build.
And then you're under a roof.
You don't have rain and snow andweather issues.
You can just keep going.
And so the quality control isalso superior in that
environment because you don'thave those delays.
You're not climbing up onladders to build things on the
fifth story.
(17:51):
You're building that on theground, delivering it to a job
site and lifting it into thefifth story.
And so there's a lot of benefitsthat continue to pave a path
forward that modularconstruction, we strongly
believe, will be the future ofat least housing construction.
I guess I should have clarified.
But I mean, if we're talkingabout a desperate need for
(18:13):
housing, I can't think of abetter answer than an assembly
line setting where you'rebuilding in a controlled
environment and then deliveringthose with consistent quality
and on a very consistenttimeline to a job site.
So now when we build themodules, got a good quality of
standard, we got to get them tothe site.
(18:33):
So, Jill, can we talk a littlebit about the benefits of the
logistics when you're workingwith a set unit and you're
delivering these to a job siteand how we get them into place?
SPEAKER_02 (18:44):
Yeah, because going back to your conversation about
how shipping containersdetermined the units of
transportation, they're aubiquitous model that determined
measurements for so many things.
It's the same thing for moduleunits that need to get to a job
site.
It's all of the same components.
It's almost apples to apples forgetting a module for modular
(19:08):
construction to a job site.
You still need a truck and alogistics company to get your
units there.
You still need mechanisms forloading those units onto and off
of trucks.
And then you also need equipmentto offload when you're on the
job site.
So you likely need a crane andthere's going to be hooks on
these modules that you have acertain clipping mechanism and
(19:29):
you're getting those modules andsetting them into place on a
foundation that's already beenset.
So all your site work is alreadydone.
Your modules are the plug andplay components that are all
going onto your job site.
It's the same thing withcontainers.
So we speak the exact samelanguage as these modular
companies.
So it's a really interestingdynamic that we're already set
up for success.
(19:50):
Um, Breck, there were a coupleof other things that you had
mentioned when you were goingthrough the advantages of
working in a facility formodular construction that I also
just wanted to contribute reallyquickly.
There's a huge differencebetween union and non-union,
non-union labor because thereare exceptions in a facility
versus when you're bringingpeople to a job site, sometimes
(20:13):
those rules change.
So that's another big differenceas well.
SPEAKER_00 (20:17):
Yeah, speaking of union labor, you gotta love
them.
You gotta have yourfrustrations.
I mean, when I get DTE to comeout to my job site, I, you know,
I'm lucky if I get one guy.
But when the city comes in torun my gas line for the house
that I'm building up the streethere, 15 people showed up in six
(20:38):
trucks.
They had two traffic controllertrucks to run a gas line, and
that meant that 14 people werestanding around a circle with
one person you could cover.
These are the kind of situationsthat we'd like to avoid in using
your taxpayer dollars towardsunnecessary labor because the
market's controlled.
So you're actually giving theadvantages back to the power of
(21:01):
developers.
And and Leslie, I want to giveyou an opportunity to speak on
this.
Jill, I just want to hit homethe last point you made is
really it's time.
Time is the one major thing.
Like, can we guarantee you themodular construction is gonna
save money?
No, and it might pose somelogistical challenges, or you
might have to cut through someextra red tape because not
everywhere has fully acceptedthese.
(21:22):
However, it will happen faster.
Your construction is gonnahappen faster.
So, Leslie, from a developerstandpoint, as we wrap up this
conversation, what do you sayare some of these advantages and
why should they be lookingtowards modular solutions?
SPEAKER_03 (21:36):
Well, it's time.
I mean, for me, it would be justtime and time alone.
Um, the time that it takes toset your project, you're
weathered in, and you finish upand wrap up.
You know, they did a study umback in the day with Travel
Lodge, did this study on thetravel lodges that were being
(21:56):
built in Amsterdam.
This was in the in the like Late1990s, um, early 2000s.
And the study said this.
They said they would they vowedto build all future hotels,
travel odds hotels fromcontainers, or modularly, I
should say, at that point,because they had taken
containers and made them into amodular hotel.
(22:18):
But they vowed that because onaverage they were saving between
23 and 26 percent on theirbottom line when they factored
in three things.
Number one, the time that ittook to frame.
Number two, the cost ofmaterials went down because
economy of scale, which we'vealready talked about.
And then finally, number three,the amount of money they would
(22:40):
have never had.
They added the six to eightmonths of rents that they had
received.
SPEAKER_00 (22:47):
Yes, that is on top of all of that.
SPEAKER_03 (22:50):
So it averaged 23, 26 percent of revenue to the
bottom line.
And you can't go wrong withthat.
That's why.
This is why.
This is why a developer reallyshouldn't want to know more
about modular.
You know, in the past, I cantell you right now, if you'll
recall the old tiger stadiumwhen when um when that part of
(23:11):
the building was modular.
SPEAKER_00 (23:13):
And even they replaced the tiger stadium when
they didn't at that time, atthat time they I think it was
280 bucks a square foot.
SPEAKER_03 (23:25):
And that was almost 10 years ago.
280 bucks a square foot formodular.
It has gone up today.
And and and modular, even thoughwe see a lot of modular housing
companies, you know, from$125 asquare foot.
Um we call bullshit on that.
I mean, we really do becausethey don't take into
consideration all the otherfees.
(23:46):
I mean, we could do the samething, but it's not for us a way
we would want to deliver theinformation.
People want to hear the totalcost, not just, oh, the actual
construction, because peopledon't and cannot correlate the
two.
A number is a number is anumber.
Bottom line is all developersshould really take a look at
modular, at least a steppedapproach into modular.
(24:09):
Do some of your some of yourwork on site, but get get the
framing done.
It's it's available on so manylevels with the with the SIP
panels that that you've brought,the steel, the steel enforced
ones, um, in addition tocontainers.
I mean, steel framed, we'reusing volumetric steel framing,
but there's just so manyopportunities right now to
(24:31):
bridge the gap right now tospeed up your cost of
construction.
Um, and I mean to speed up yourcost of construction.
That's awesome.
That's it for me.
I think it's a way to go.
SPEAKER_00 (24:42):
Yeah, well, from a design standpoint, too, it's
it's faster to design withmodules.
Yes.
Uh, because the morerestrictions you have, the less
decisions there are to be made.
And the less decisions we haveto make, the faster you can move
through design.
Because how many modules can Ilay out on the site?
How do we want to divvy them up?
How many units do we want?
You can add them, you can takethem away.
(25:03):
And that actually can back youin your pro forma uh when you're
at that point in a project, whenyou're actually laying out the
numbers and trying to make thispencil.
There's always this age-old backand forth conversation between
developers and architects wherethey're like, How much money do
we have?
And they're like, I don't know.
What can I support?
And they're like, Okay, well,how many units?
And you're like, Well, what kindof units?
(25:24):
Well, if you're working withmodules, it's very easy to come
up with a baseline, run thenumbers, and say, actually, I
need more of this style of unit.
I need less of these.
Like, how many projects do wesee start here and then end in a
wildly different place, whetherthat's scaling up or scaling
down?
Well, modular can respond tothose changes very quickly and
not have to go through all ofthe steps of like, oh, I got to
(25:46):
scrap this entire design andstart over.
So that's another benefit uh asa whole.
So wrapping up in conclusion,modular construction means that
as much of the project is doneoff site as possible.
And that often includeseverything from soup to nuts, a
plug-and-play operation.
It happens faster and has betterquality control.
(26:08):
And there is virtually nodifference between container
architecture and modulararchitecture.
Container is just one of themodular approaches among many
that we've covered here today.
And we could give you specificexamples on.
And if you're a developer andyou don't have a modular
solution selected and you'recurious to know more, reach out
(26:29):
to our team because depending onthe climate that you're building
in, the municipality and therules of engagement, we could
probably point you in the rightdirection and tell you who a
good partnership would be withone of these modular solutions.
It might be wood, it might besteel, it might be containers,
but we can help you find thatsolution, find the partnership,
get a design done, and speed upyour construction timeline.
(26:52):
All right, King, until nexttime, we'll see you on
Innovative Real Estate withThree Squared Inc.
Thanks.
SPEAKER_01 (26:58):
We hope you enjoyed this episode.
And if you found it so valuable,you want to connect with us
one-on-one, click the link inthe description to tell us all
about your project so we canhelp you get started.
And to get notified on the nextepisode here on Innovative Real
Estate, go ahead and subscribeto the podcast on iTunes so you
never miss a beat.
Get out there, put today'sadvice into action, and we will
(27:19):
see you in the next episode.
Welcome to the Innovative Real Estate Podcast
with your hosts Leslie Horn,Brett Crandall, and Claire
Olilla.
We're here to make your lifeeasier as a real estate
developer and teach youeverything we've learned about
designing and buildinginnovative homes, multifamily,
and mixed-use structures.
On this podcast, we'll be givingyou our best advice, trainings,
(00:23):
and QA segments so you can learnfrom our years of experience and
make your innovative vision areality.
SPEAKER_00 (00:31):
Welcome back to the Innovative Real Estate Podcast.
We are your host, Three SquaredInc.
today, based out of Detroit andHawaii, because Leslie's on a
little uh work cation there.
Um today we are going to betalking about uh modular
construction, which is a topicthat we've brought up a couple
of times uh on a variety ofepisodes.
(00:52):
But the reason why we're talkingabout it today is because, well,
we've been working with modules,Shiba containers, since the
beginning, and we're gonnahighlight how there's so many
overlaps between cargoarchitecture and modular
construction in general.
Before we get into it, uhLeslie's gonna highlight a
couple of recent events that wehave been involved with.
Leslie, take her away.
SPEAKER_03 (01:13):
Yeah, no, thanks, Breck.
And um, I know that as a firm,as an architectural firm,
oftentimes, you know, we getasked to, you know, talk to some
groups and other things, butI'll say lately Breck has been
on fire.
Uh, just the other night wasasked to come back to WDTV uh
(01:34):
and discuss some of thehappenings going on in in our
neck of the woods foraffordability.
And Breck, the reason I wantedto highlight this, in addition
to being on a panel at the FortWayne um Innovative Summit, it
was uh in Fort Wayne, there'sfour houses, just for context,
everybody, there's four housesthat are being built and
(01:55):
supported by the city.
J.T.
King, who's been on our podcast,is the developer on this, and
he's working really close withthe city of Fort Wayne to create
these four models.
And Three Squared has uhdesigned along with home two of
these models.
And I think it's really relevantnot to talk about a specific
(02:15):
project, but given today'stopic, really highlighting the
conversation about why modularmakes sense and also bridging
the gap between what 3Squartshave been doing from day one in
a modular design process.
(02:35):
And I think your conversations Ithink the reason you're being
asked to come on stage to talkand to address these, it's
because first and foremost,Three Squared's doing it.
Uh, and secondly, it is sorelevant to today's economy and
to today's you know, lack ofaffordable and attainable
(02:57):
housing, missing middle,whatever you want to call it,
there is a lack of housing.
And I believe under yourleadership and your design
prowess, the actual affordableand attainable housing module is
really where it needs to be.
And so I wanted to talk aboutthat.
We're gonna put in links to toat least the the WD uh E T V W D
(03:22):
E T.
W D E T T V.
The the the it's a actually, youknow, I didn't realize they even
have that on NPR, but I listenedto it yet from what you shared
yesterday.
And man, it was simple, it wasvery succinct, uh, and actually
uh it brought a lot of clarity.
I think I think our listenerswill really like that if they
want to spend another 10, 12minutes listening to that
(03:42):
interview.
It was really, it was reallycapturing.
Thank you.
So that's what I wanted tohighlight.
SPEAKER_00 (03:52):
And then yeah, that was that was a great opportunity
to to get on the radio and to tochat with local host Nick
Austin.
Great dude.
Um, for whatever reason, helikes us and keeps calling us
back.
Uh, as it pertains to theinnovative housing summit, uh, I
thought I was gonna talk in apanel discussion to like 30
people and uh Scott Shaw and Iboth presented to represent
(04:12):
Three Squared and Home.
And we showed up and there's aroom of 650 people, and they put
us on a main stage right infront of it.
You know, we both thrive in thatenvironment, so it was a lot of
fun.
But you know, we were on thatpanel with two other innovative
housing solutions.
Um, so we got to actuallypresent as like a group of four
panelists, each representing adifferent housing solution.
(04:34):
Because yeah, our team's doing alot, Leslie, but it takes an
army, and the shortage ofhousing isn't gonna be solved by
any one group or any onesolution.
I think we all need to bebanging on all cylinders to be
able to figure this out at scaleat large.
We we just need housing, period.
SPEAKER_03 (04:51):
Yes.
SPEAKER_00 (04:51):
On that note, the future of housing will be
modular housing.
You could disagree with me allyou want, but I'm sorry you're
gonna lose this argument.
It's how the building industryis heading.
If you've built anything, ifyou've seen construction, if
you've talked to anybody,building costs are going through
the roof.
There's a shortage of laborers,we need housing solutions.
(05:15):
And if you look to historically,Europe's always like a decade
ahead of us when it comes tobuilding solutions.
They've been doing modular fordecades.
All right, they've been doingthis since like you could track
these back to the 40s wherethey've been putting concrete
modules in most of Europe,starting in Germany, uh and
Japan's been doing this forever.
(05:36):
So there's a whole area of Asiathat's been building modular
forever, and it's still like arelatively new thing in the
United States, uh, that a lot ofpeople are apprehensive to.
Part of that, and we'll get intoit, was a little bit of the red
tape around that scenario andhow it's characterized, which I
know we've talked about atlength on other episodes.
But I do just want to prefacethe conversation with we're
(05:58):
heading towards modular becausemodular offers you a solution
where you're doing more off-siteand less on-site.
Because the time you spendswinging hammers on a job site,
as we know, time is money.
And if we're going to reducecosts of buildings, that means
we have to build where labor ischeaper and we have to do it in
a more efficient manner.
(06:18):
And why do we build cars the waythat Henry Ford changed us to
build cars?
Because if you were to take allof the pieces and send all the
pieces to a garage and thenassemble the car there, it
wouldn't make as much sense asif it came off an assembly line.
What a novel concept they hadthat buildings have just uh, I
guess, never wanting to uh adoptthat form of construction.
(06:45):
But that's where we're heading.
Uh, we will bake, we'll makebuildings more akin to the way
that we build automobiles,aircrafts, just about every
product that you use in afactory setting.
And then we'll deliver that tothe job site.
Leslie, any thoughts you'd liketo add on top of that before I
continue diving in?
SPEAKER_03 (07:03):
No, I think I mean, I uh uh no, I mean, you're
you're on target, and it'sinteresting because ever since
we started with cargoarchitecture, and this is even
you know, like in 2008 when wesaw the the methodology in
Amsterdam, right?
Because you're right, Europe hadbeen doing it in 2000 and when
(07:23):
we learned about it in 2007 andeight, Amsterdam had already
been doing it for over 10 years.
I mean, like Europe is just soleaps and bounds ahead of us.
And one of the key elements isoff-site work.
So that's the key.
I mean, that's part of it.
No delays, it's all done in asafe setting, a controlled
setting.
You can order all the materialsin super big, you know, bulk.
(07:47):
So I it's it's the right pathfor us to take.
Keep on going.
Thank you.
I just wanted to add that, butthis is this has been happening
for decades.
You're right.
SPEAKER_00 (07:57):
So obviously, we've done work with shipping
containers, got 30 plusbuildings under our belts, but
we're also working with a numberof other materials.
We're we're architects, so wehave to follow the trends and we
have to educate ourselvesconstantly on the up and coming.
And we're constantly learning.
If you have ever gone a daywithout learning something, uh,
(08:17):
as we like to say on this team,you've wasted a day.
So our experience with shippingcontainers has taught us a whole
lot.
And let me give you a briefhistory uh on why that is.
It's because shipping containersare a ubiquitous module that
have been accepted by everysingle country around the globe.
They're one of the few objectsthat can be received and sent
(08:41):
virtually anywhere on theplanet.
And now you think about them.
I'm gonna give you what's calledthe Bader-Meinhofer effect,
where now that I've talked aboutshipping containers, you're
gonna be on your drive home andyou're not gonna be able to get
home without seeing a shippingcontainer.
And then you'll start noticingthem everywhere.
You'll see them on the road,you'll see them as storage
units, you'll see them instacks, by the freeway, all over
(09:01):
the place, in buildings,wherever.
And that's because they areeverywhere.
They are how everything in yourlife got to where you are,
essentially.
I'm talking like look aroundyou.
You see a pencil, a pen, aplant, a lamp, like all of these
things probably were shipped toyou from their point of origin
to the United States, taken intoa port, and then unloaded.
(09:23):
So the module of a shippingcontainer dictates a lot of the
built environment that we usefor transportation.
Why are bridge heights theheights that they are?
Because a shipping containerwould hit them if they were any
lower.
Road widths, uh, the chassis oftrucks on the back of semis, uh,
the ships that are used, whichthen dictate the widths of locks
(09:45):
because these container shipshave to like it, just goes on
and on and on.
And that dimension is eight feetwide, 40 feet long, and eight
and a half to nine and a halffeet tall.
Okay, and so that's whatdictates a lot of our built
environment.
So if you're building modular,and when I say modular, we'll
get into the definition of that.
But if you're building in chunksoff-site and bringing that to
(10:07):
the job site, chances are you'reprobably gonna be working close
to that module.
You know, sometimes they're alittle bit wider, a little bit
longer, but all in all, you'reworking with a very similar
rectilinear shape of a shippingcontainer because the whole
world is meant to move thoseobjects, right?
So whether you're building yourmodules out of wood, steel,
(10:27):
concrete, foam, it's gonna besimilar to a shipping container.
So when we say that we've donework with shipping containers,
you can roll your eyes, youcould tell me it's silly, you
could tell me it's not gonnasave any money or time, and we
could talk about it.
We've learned a lot of lessonsover the years, and there's
great stuff about them, andthere's challenges about them.
But what I want to focus on isthe fact that because I am so
(10:50):
comfortable with that module ofa shipping container as a
building element, and becauseour team has been working with
them for over a decade now, weknow how to do modular
construction full stop, right?
Because it's all one and thesame when you think about it,
when you back up and think aboutit.
There are intricacies aboutshipping containers, but what I
(11:11):
what I'm trying to say is likethere's so many overlaps to
modular construction that if youare looking into modular
building, we could be ofservice.
So let's define modularconstruction and what actually
sets that apart from asite-built construction and some
of the challenges with the redtape.
So, Jill, our lovely projectmanager here at Three Squared
Inc., and the one who isdirecting a lot of behind the
(11:34):
scenes efforts and thelogistical coordination on these
projects.
Jill, could you define for ourlisteners what the difference is
with modular construction versussite construction and some of
the challenges and approvals formodular construction?
SPEAKER_02 (11:46):
Yeah, I think the biggest difference in modular
construction is the there aretypically state level approvals
that you need in order toconstruct that way.
And then there are additionalinspections that are required.
So you're going to have aninspection that's going to have
to happen at your facility whenyour walls are still open.
So you can't close in becauseyou still have to be able to get
(12:07):
access to your mechanicalelectrical plumbing systems for
those inspections to pass.
And then you typically also needan inspection once you bring
those modules modulars to yourjob site.
On-site construction is exactlythat.
Everything that needs to happenon the site is going to happen
on the job site to get yourbuilding built from the ground
(12:28):
all the way up.
So I think another hugedifference there in modular
construction, you're always in acontrolled environment.
The temperature is consistent,the work hours are consistent,
you don't have weather delaysthat you're going to see on a
job site.
So those are some of the mainfactors that allow you to take
full advantage of modularconstruction technologies
(12:49):
because you're not going to befaced with all of these delays
that you might see on a job sitewhen you're exposed to all of
the elements and you have likecertain time periods that aren't
ideal to build.
It doesn't matter what time ofthe month you're building when
you're building modularly.
The state level approvals,typically you have to work with
(13:10):
certain contacts that have thoseapprovals in order to get you to
move forward.
So we kind of know that processand know how to get you through
the modular process, but we alsoknow how to get you through the
building on site.
And what we're saying is thatit's just looking more and more
feasible to get your projectbuilt off-site because there's
many more advantages.
(13:31):
And that's how the future ofconstruction is, and we're here
for it.
SPEAKER_00 (13:35):
So, simply stated, the difference between modular
and site built is that yourmodules that are coming to the
construction site haveeverything in them.
They've been plumbed, they haveyour mechanical units, they have
wires in them.
Oftentimes they have doors andwindows, and your interior and
exterior finishes.
Like it's a finished building.
They say plug and play a lot,right?
(13:56):
Like obviously, there's alwayssomething that has to happen on
the job site.
You have to run water to it andmake sure your waste goes
somewhere.
You have to run electrical powerlines to it, and you have to
have foundations to set them on.
But increasingly, we see modulesuh for construction like this
that actually have the roofsattached to them.
Now they're really awesomesolutions where some of these
roofs go between two modules andthey like flip down after you've
(14:19):
set the module in place.
There's a lot of solutionsthere, and we're going to
continue to get there.
The problem that Jill isspeaking to is that we live in a
country that is actually like50, like 54 countries and
counting.
And then every city in each ofthose states have their own set
(14:39):
of rules.
And so when you get a buildingapproved in your local
municipality, it's going to bedifferent in Detroit than it is
in Fort Lauderdale, Florida.
Some of these are easier andmore lax.
Some of them are very, verystrict and have a lot more hoops
to jump through and a lot morered tape, depending on where you
are in this great country.
And so they have yet toestablish blanket rules for
(15:02):
things that are built in afactory.
Because of what if one factory,for instance, in Denver,
Colorado, is shipping buildingsto the rest of the continental
United States?
Like, okay, how do we get thatapproved?
And what Jill's referring to isthe people that approve those
have to go to where the buildingis being built and approve it
there, which is just a differentprocess.
(15:23):
So again, we're we're playing alittle bit of catch up.
There, there will eventually befederal legislation that will
allow modular constructionacross all of North America,
just like we have building codesthat apply to all of North
America at once, because we havesimilar conditions, we have
similar rules.
But until we get there, we haveto navigate through the red
(15:44):
tape, which is often the biggestchallenge in this industry.
And that's where we come in.
That's where we help, is becausewe have those connections, we
have those contacts.
It doesn't matter who yourmodular builder is, your modular
builder still needs an architectto put plans together.
They're just architecting withinthe confines of their modules.
And everybody has slightdifferences to their modules.
(16:06):
But again, I'll point back tothose modulars are going to be
strikingly similar to the size,shape, weight, and dimensions of
a Shiva container.
So you give me a modularbuilding solution.
We can work with that as anarchitecture firm and design it
because there's still a lot ofdesign.
Like you can have modules thatcould be very blandly dressed
(16:26):
just to get it done, or youcould have a little bit of fun
with it.
It's the way you position them,it's the way you lay out the
entire development, the way yourespond to the site's context.
All of that can still bedesigned within a modular
provider's modules.
And then you put the designtogether, and then we have to go
through the approval process.
And depending on where thatmanufacturer is coming from, and
(16:49):
it might not even be in theUnited States.
We're currently working with uhwith modular providers that are
in other countries and evenoverseas.
Like those are possiblesolutions.
Because, as Joe and Leslie bothstated, building it in a factory
is a huge benefit because youcan buy in bulk.
(17:10):
Why are things so much cheaperat Costco and at IKEA?
It's because they're buying inquantities of millions, not in
dozens.
So you're getting bulk pricingon materials.
All of your tools are there.
They're all connected to thepower.
There's no running generatorsout there, there's no temporary
power solutions.
(17:31):
Everything you need is at yourfingertips in order to build.
And then you're under a roof.
You don't have rain and snow andweather issues.
You can just keep going.
And so the quality control isalso superior in that
environment because you don'thave those delays.
You're not climbing up onladders to build things on the
fifth story.
(17:51):
You're building that on theground, delivering it to a job
site and lifting it into thefifth story.
And so there's a lot of benefitsthat continue to pave a path
forward that modularconstruction, we strongly
believe, will be the future ofat least housing construction.
I guess I should have clarified.
But I mean, if we're talkingabout a desperate need for
(18:13):
housing, I can't think of abetter answer than an assembly
line setting where you'rebuilding in a controlled
environment and then deliveringthose with consistent quality
and on a very consistenttimeline to a job site.
So now when we build themodules, got a good quality of
standard, we got to get them tothe site.
(18:33):
So, Jill, can we talk a littlebit about the benefits of the
logistics when you're workingwith a set unit and you're
delivering these to a job siteand how we get them into place?
SPEAKER_02 (18:44):
Yeah, because going back to your conversation about
how shipping containersdetermined the units of
transportation, they're aubiquitous model that determined
measurements for so many things.
It's the same thing for moduleunits that need to get to a job
site.
It's all of the same components.
It's almost apples to apples forgetting a module for modular
(19:08):
construction to a job site.
You still need a truck and alogistics company to get your
units there.
You still need mechanisms forloading those units onto and off
of trucks.
And then you also need equipmentto offload when you're on the
job site.
So you likely need a crane andthere's going to be hooks on
these modules that you have acertain clipping mechanism and
(19:29):
you're getting those modules andsetting them into place on a
foundation that's already beenset.
So all your site work is alreadydone.
Your modules are the plug andplay components that are all
going onto your job site.
It's the same thing withcontainers.
So we speak the exact samelanguage as these modular
companies.
So it's a really interestingdynamic that we're already set
up for success.
(19:50):
Um, Breck, there were a coupleof other things that you had
mentioned when you were goingthrough the advantages of
working in a facility formodular construction that I also
just wanted to contribute reallyquickly.
There's a huge differencebetween union and non-union,
non-union labor because thereare exceptions in a facility
versus when you're bringingpeople to a job site, sometimes
(20:13):
those rules change.
So that's another big differenceas well.
SPEAKER_00 (20:17):
Yeah, speaking of union labor, you gotta love
them.
You gotta have yourfrustrations.
I mean, when I get DTE to comeout to my job site, I, you know,
I'm lucky if I get one guy.
But when the city comes in torun my gas line for the house
that I'm building up the streethere, 15 people showed up in six
(20:38):
trucks.
They had two traffic controllertrucks to run a gas line, and
that meant that 14 people werestanding around a circle with
one person you could cover.
These are the kind of situationsthat we'd like to avoid in using
your taxpayer dollars towardsunnecessary labor because the
market's controlled.
So you're actually giving theadvantages back to the power of
(21:01):
developers.
And and Leslie, I want to giveyou an opportunity to speak on
this.
Jill, I just want to hit homethe last point you made is
really it's time.
Time is the one major thing.
Like, can we guarantee you themodular construction is gonna
save money?
No, and it might pose somelogistical challenges, or you
might have to cut through someextra red tape because not
everywhere has fully acceptedthese.
(21:22):
However, it will happen faster.
Your construction is gonnahappen faster.
So, Leslie, from a developerstandpoint, as we wrap up this
conversation, what do you sayare some of these advantages and
why should they be lookingtowards modular solutions?
SPEAKER_03 (21:36):
Well, it's time.
I mean, for me, it would be justtime and time alone.
Um, the time that it takes toset your project, you're
weathered in, and you finish upand wrap up.
You know, they did a study umback in the day with Travel
Lodge, did this study on thetravel lodges that were being
(21:56):
built in Amsterdam.
This was in the in the like Late1990s, um, early 2000s.
And the study said this.
They said they would they vowedto build all future hotels,
travel odds hotels fromcontainers, or modularly, I
should say, at that point,because they had taken
containers and made them into amodular hotel.
(22:18):
But they vowed that because onaverage they were saving between
23 and 26 percent on theirbottom line when they factored
in three things.
Number one, the time that ittook to frame.
Number two, the cost ofmaterials went down because
economy of scale, which we'vealready talked about.
And then finally, number three,the amount of money they would
(22:40):
have never had.
They added the six to eightmonths of rents that they had
received.
SPEAKER_00 (22:47):
Yes, that is on top of all of that.
SPEAKER_03 (22:50):
So it averaged 23, 26 percent of revenue to the
bottom line.
And you can't go wrong withthat.
That's why.
This is why.
This is why a developer reallyshouldn't want to know more
about modular.
You know, in the past, I cantell you right now, if you'll
recall the old tiger stadiumwhen when um when that part of
(23:11):
the building was modular.
SPEAKER_00 (23:13):
And even they replaced the tiger stadium when
they didn't at that time, atthat time they I think it was
280 bucks a square foot.
SPEAKER_03 (23:25):
And that was almost 10 years ago.
280 bucks a square foot formodular.
It has gone up today.
And and and modular, even thoughwe see a lot of modular housing
companies, you know, from$125 asquare foot.
Um we call bullshit on that.
I mean, we really do becausethey don't take into
consideration all the otherfees.
(23:46):
I mean, we could do the samething, but it's not for us a way
we would want to deliver theinformation.
People want to hear the totalcost, not just, oh, the actual
construction, because peopledon't and cannot correlate the
two.
A number is a number is anumber.
Bottom line is all developersshould really take a look at
modular, at least a steppedapproach into modular.
(24:09):
Do some of your some of yourwork on site, but get get the
framing done.
It's it's available on so manylevels with the with the SIP
panels that that you've brought,the steel, the steel enforced
ones, um, in addition tocontainers.
I mean, steel framed, we'reusing volumetric steel framing,
but there's just so manyopportunities right now to
(24:31):
bridge the gap right now tospeed up your cost of
construction.
Um, and I mean to speed up yourcost of construction.
That's awesome.
That's it for me.
I think it's a way to go.
SPEAKER_00 (24:42):
Yeah, well, from a design standpoint, too, it's
it's faster to design withmodules.
Yes.
Uh, because the morerestrictions you have, the less
decisions there are to be made.
And the less decisions we haveto make, the faster you can move
through design.
Because how many modules can Ilay out on the site?
How do we want to divvy them up?
How many units do we want?
You can add them, you can takethem away.
(25:03):
And that actually can back youin your pro forma uh when you're
at that point in a project, whenyou're actually laying out the
numbers and trying to make thispencil.
There's always this age-old backand forth conversation between
developers and architects wherethey're like, How much money do
we have?
And they're like, I don't know.
What can I support?
And they're like, Okay, well,how many units?
And you're like, Well, what kindof units?
(25:24):
Well, if you're working withmodules, it's very easy to come
up with a baseline, run thenumbers, and say, actually, I
need more of this style of unit.
I need less of these.
Like, how many projects do wesee start here and then end in a
wildly different place, whetherthat's scaling up or scaling
down?
Well, modular can respond tothose changes very quickly and
not have to go through all ofthe steps of like, oh, I got to
(25:46):
scrap this entire design andstart over.
So that's another benefit uh asa whole.
So wrapping up in conclusion,modular construction means that
as much of the project is doneoff site as possible.
And that often includeseverything from soup to nuts, a
plug-and-play operation.
It happens faster and has betterquality control.
(26:08):
And there is virtually nodifference between container
architecture and modulararchitecture.
Container is just one of themodular approaches among many
that we've covered here today.
And we could give you specificexamples on.
And if you're a developer andyou don't have a modular
solution selected and you'recurious to know more, reach out
(26:29):
to our team because depending onthe climate that you're building
in, the municipality and therules of engagement, we could
probably point you in the rightdirection and tell you who a
good partnership would be withone of these modular solutions.
It might be wood, it might besteel, it might be containers,
but we can help you find thatsolution, find the partnership,
get a design done, and speed upyour construction timeline.
(26:52):
All right, King, until nexttime, we'll see you on
Innovative Real Estate withThree Squared Inc.
Thanks.
SPEAKER_01 (26:58):
We hope you enjoyed this episode.
And if you found it so valuable,you want to connect with us
one-on-one, click the link inthe description to tell us all
about your project so we canhelp you get started.
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