Innovative Real Estate with Three Squared, Inc.
As specialists in efficient residential and commercial prefabricated design, Leslie Horn, Breck Crandell, and Jill Ramirez of Three Squared, Inc. share their greatest insights, tips, and case studies from their years of experience in the industry. They'll be giving you their best advice through, trainings, guest features, and Q&A segments so you can turn your innovative vision to a reality.
Innovative Real Estate with Three Squared, Inc.
Reimagining Multifamily Housing With Susan King of HED
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Why is change so hard to enact on a large scale level?
In this episode we sit down with Susan King, Licensed Architect and Principal at HED, to discuss why it is so challenging to pioneer change in the architecture and development industry.
We also speak about the mindset shift of upfront costs versus longevity, the misconceptions of modularization, and how Passive House is reimagining how we design multifamily housing.
Here is a glimpse of what you'll learn in today's episode:
- Introduction to Susan King and Passive house.
- Incentivising cities to adopt innovative building practices.
- Challenging the 'cost focus' mindset.
- How Passive House is changing multifamily housing.
- Challenges modularization faces in the building industry.
Click here to learn more about the work Susan is doing with Passive House.
Lean more about HED here.
Conservatory Apartments In Chicago
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 LinkedIn to stay up to date on new project releases, trainings, and more.
Welcome to the Innovative Real Estate Podcast with your hosts Leslie Horn, Brett Crandall, and Claire Ovilla. We're here to make your life easier as a real estate developer and teach you everything we've learned about designing and building innovative homes, multifamily, and mixed use structures. On this podcast, we'll be giving you our best advice, trainings, and QA segments so you can learn from our years of experience and make your innovative vision a reality.
SPEAKER_00Welcome back to the Innovative Real Estate Podcast here with Three Squared Inc. We are so excited to welcome on a new guest today by the name of Susan King from HED. And uh just a little bit of intro on our guest today, so you know what we're about to get into for our conversation. Susan is a registered architect and a principal at HED, one of the oldest and largest architecture and engineering firms in the country. She oversees the firm's housing and community work across the Midwest and advocates for both attainable housing and green market transformation of the building industry. So we are thrilled to bring her on. Leslie and Breck actually met her a few years ago. And it's been wonderful to reconnect. And we're really excited to have a conversation around multi-unit housing design practices that impact user health, affordability, and the environment. Susan, welcome to the show.
SPEAKER_04Yeah. Oh, thank you so much for having me. And yes, it's a pleasure to reconnect.
SPEAKER_00Beautiful. We were just having an incredible introductory conversation around our frustration points around modularization as a solution in this industry and how challenging it's been to get it up and running. And um, Breck and Leslie, I'm curious where you want to start this conversation off today, because we were just having a great conversation. And now I feel like we need to pick it back up since we've started recording.
SPEAKER_03No, that's fantastic. Breck, I think I'm gonna let you go ahead and talk first. Um, and just before you do, I know I just said that. Uh, Susan, really, it is truly uh amazing to reconnect uh for our listeners. Susan actually has been in our building, our model center in Detroit. This is pre-COVID. I think you've got a fun slang word for that. We'll talk. I'm sure it'll come up a hundred times. But it was amazing to, you know, to come back in the presence of each other uh to actually see the growth on both sides. And what I love about this call and love about this chat today, it doesn't, there's no competition. It's all about, I mean, I still can't wait to collaborate on a project with you and your firm. I think there's so many missing opportunities amongst firms and and colleagues that you know, we just we just we lose ourselves. And I just wanted to say those words out loud. It'll be an honor when we can actually work on a project together. And it's been wonderful to catch up and to see your progress and and actually what you're passionate about. This will be a I think there's a lot of synergies moving forward.
SPEAKER_02Yeah, thank you. Yeah, it's just a matter of time before we end up collaborating. Yeah, that's just part of the nature of our industry. Speaking of our industry, we've always known that housing has been a crisis in America and really across the world because the population's growing, but our housing stock is not. And regular listeners of this podcast know that uh I particularly have uh passionate interest in affordable housing, which I believe has bled pretty heavily into all of three squared inc. And so we have been, you know, transitioning in a you know matter of words into how we can approach this conversation, which uh uh obviously we kind of built a name for ourselves based on you know using shipping containers as an element of design, but we've bridged into all sorts of construction methodologies. We as of today have 11 projects under construction, uh, about to be 12 this week. So that's very exciting for our team. And these are all over the map. There's some SIPS housing, there's some prefabricated steel structures. Uh, we're working with some cross-laminated timbers and obviously shipping containers. But Susan, I want to hand it over to you just to talk on a broader spectrum of you know the housing industry and your experience through the firm and throughout your career of how you've been able to impact the housing market. Because I know a lot of what uh HED has done in the past uh has really particularly focused on housing methodologies. So I'm gonna turn it over to you and just let's let's open the conversation with a broader spectrum because I know we're gonna get detailed very quickly. So just give us your thoughts on where we are.
SPEAKER_04Uh yes. Uh so HED, as you've already mentioned, it's an older, an older firm. And uh we do a lot of different things, but housing has been uh you know the the major focus of really my career at this point. Uh and we do a lot of housing and we do everything from um we don't actually do single family homes, but we do we do everything from uh you know serving families, uh affordability. I know we're gonna talk about that a lot today. And that's been uh an area of my again, my focus. I have colleagues across the country though that um that do a lot of market rate. Um we also do a lot of senior living. So we we like to say we cover all ages um and all economic, you know, um demographics. Um, so really broad, broad range. So there's a lot of work there. And you are correct. Um, I think everybody is aware, and COVID certainly heightened this, that there, you know, there's a housing crisis, but it's not new. You know, we've been having a housing crisis for a long time. Um so uh before I jump into maybe prefab and modularity, some of the things we were talking about earlier, I'll say um I also feel very fortunate in my career that um if I have two passions, one is housing and the other is um sustainability, that I've had the um the the uh opportunities. Um I sometimes I say I feel really, really lucky, but sometimes it's also a combination of recognizing an opportunity to uh to bring those things together. Um with and with affordable housing, oftentimes maybe in spite of all the other extra layers of stuff you have to do for funding and financing, um those projects are often leading the way when it comes to also integrating healthy environments, uh, energy efficiency, and all of those things, um as opposed to just continuing to build the way we always we've always built for a bazillion years. So um so what are the other things I'm seeing? So mod modular uh um or prefab or like this where the shipping containers would fit in. Um we're all waiting to see why can't we do it at scale? Let's, you know, uh, can we it seems like a no-brainer? I think I said that earlier. Um it seems like a no-brainer and yet it doesn't take off at scale, you know. And um I don't know if we want, you know, we can delve into maybe the multitude of reasons, maybe why that is, but um, but it needs to happen quickly. Um, and and if it can also be housing that's modular and you know, building in um sustainable, you know, high performance envelopes, the things that equal sustainability for housing and health, you know, uh red list-free products on the inside and all of that. Um that would be a huge step, you know, towards um solving our housing crisis.
SPEAKER_02I think that our team could probably point to three or four podcast episodes that delve directly into some of the reasons and rationale behind how these things have not moved forward at scale. But as a profession, it is frustrating because the hot topic for everyone is always cost, cost, cost. Like, what does it cost? What does it cost per square foot? I'm like, I don't dude, I don't know. Like, I does it even matter right now. Like, there's there is so much more, and just like the few items that you just touched on, Susan, are it's so much more ethereal of a conversation than just talking about the cost of construction because we really could be benefiting so many other ways uh for our economy, for the economics, for the sustainability, for the health and welfare of the people occupying these buildings that off often gets just like thrown to the wayside behind these conversations of just like, what does it cost? And the second question is always like, How long does it take? It's like, well, I mean, how long does it take? It's it's been decades, and we still haven't resolved this. Isn't that kind of a bigger issue we should touch on?
SPEAKER_04Right, right. Or I say, you know, what does it cost? You know, what does it cost to run the building instead of what does it cost to build it? You know, how how who do we have to talk to to get to change that that mindset, um, for sure. And yeah, I I completely agree with that. It's um uh more about um, I mentioned uh the pro a re a project I have under construction right now in the city of Chicago that is um pursuing passive house certification.
SPEAKER_02And uh I we are quickly for the audience, can you describe what passive house is? Because I know it's a loaded question, but like in your case.
SPEAKER_04Okay, yes, I can give a layman. I consider myself a layman because I'm not a certified passive house designer. You know, I don't run the there's a woofy model that tells you everything um about how the building's gonna perform and if it's meeting their standards. But um, so passive houses, I I like to describe it as um uh well it's it's hyper, you know, hyper hyper um what's the word? Hyper performance. We talk about high performance. So passive house is hyper performance in a little and it's sort of formulaic. It's like you do these things which include super tight envelope on the building, so lots of you know, insulation, um, really great windows. So I've got the best windows ever on affordable housing project now, uh, finally, um, and you know, the roof, all of that. And then, but then you couple it with your high efficiency. So sorry, before I let's talk about mechanical systems, it's like you're making the building as tight using passive stuff. Like people don't get really excited about installation. But if you make your building super um tight and all of that, um, then you need less energy to begin with. And so then then you go into your mechanical systems and they can be sized, you know, properly and not oversized. And then I keep talking about how tight it is, and we all know air quality is so important. And so then you have to balance all that all out because it's gotta be really well ventilated. Yes, we have operable windows, but we can't we're not relying, it's gotta be a controlled ventilation thing because and fresh air, you know, um, into the building. So all of those things have to work together. So that's you know, integrated design at its best to get all of those things performing. But um, so we're not uh uh you know, we're not first in the country by any any means, but um, but we are gonna be, it's it is not it's called the conservatory apartments, and it's it is 100% affordable, it's all studio apartments. Um and there's 43 of them. So you guys I could show you the floor plans later and you'll be like, oh my god, why couldn't this sit in a plug and play unit thing? And I agree with you. Uh but at the time, you know, we started the project in 2020, so it it has been a COVID project. Um but the thing that had happened in Chicago around the uh the around that time was we we received an um a new energy code, new energy code, sorry, new building code uh was adopted that for the um for the first time in um since that fire, whenever that was the famous fire in Chicago, uh we were allowed to use wood frame construction to build this building. I think I already mentioned so four stories, 43 units. Um in the old code, we would not have been able to use wood in that in that situation. So paralleling that was um uh the uh requirements from the state for the funding applications had come out and they were incentivizing passive house. And so to me, it seemed like the perfect alignment again of um we're gonna save money on our envelope in terms of the wood frame as opposed to masonry or steel or or something like that. And then that should allow us to pay for the better windows, the extra insulation, um, and all of that. And so that's kind of um, and the and the client, you know, that all made a lot of sense. Now, that's not to say we didn't get caught up in the COVID escalation things that have gone on. Uh so um where so you know it should have been, you know, it it's it's it's really is very tight site. So again, you'll laugh, you guys will laugh and probably cry at the same time because it would have been perfect. It would be a perfect modular, everything's stacked up. We couldn't um we couldn't do any, you know, a lot of push and pull. A we didn't have room, but also because of passive house, we couldn't, you know, there couldn't be a lot of jogs. They I mean it's a box.
SPEAKER_02So I so I guess I have some questions regarding passive house because this is this is fascinating. A couple of different topics. So I have like a two-part question because my understanding, and I'll I'll be very honest up front, I personally have not done a passive house, though I have many collaborators and comrades who have. Um, passive house to me is uh it just means dollar signs because it's a very expensive way of building. So I would love for you to just undermine that right away and talk a little bit about like because you've already started speaking to some of the strategies of how you've been able to achieve that. But passive house is essentially like the most efficient, the most effective model of making a building that is like self-sustaining and could potentially be off the grid because it is just the best of all fronts from design uh inspiration all the way through construction, like you are really paying attention to all the details. And so, all the ones that I am aware of have been like single family residences. But in my experience, passive house has been largely cost prohibitive from our standpoint. And so I'd love to hear your opinions on just like where what why do I, as an architect, feel that way? And what can you do to tell me I'm wrong and to explain to our listeners what the actual process looks like? Because I I'm learning a lot today.
SPEAKER_04Well, and first I'm gonna make a joke because didn't you just say you hate it when people ask how much it costs? I get a lot of my own medicine on this show. I'm talking about so well to start with, I'll give the uh the kind of the passive house. So and I didn't the the the acronym is P H I U S. So Passive House Institute of the United States, so FIAS, it gets it's gets um it's you know acronymed to or whatever that is. Uh so there um they did a uh caught you know a cost report of some kind. Now, again, this was in the before time, before COVID. Um, that's my slang for pre-COVID. Um so you know, so just practice it with that. But their their conclusion was that with an experienced uh general contractor, someone who's done passive house before, your increase is gonna be um the increase for the better windows, the little the more insulation and all of that, the air sealing strategies is three to four percent. So that's not really that much, in my opinion, especially if you can make it back in energy savings over time. Now the other part of that though is that they said if you're working with an inexperienced contractor, you can expect a five to six percent increase in construction cost. But again, it's it should not be if it it shouldn't be double. I don't know what you've seen wreck over time, you know, but it's not we're not doubling the cost of the project. It's these are incremental costs, which then again goes back to what I said is how do we change, you know, let's talk about how the building performs over time and um have that discussion instead of how much it costs day one. So yeah, so it's not nothing. There's there like and my other thing best windows I've ever had on my project. I've got triple paned windows on an affordable housing project. You can see how happy I am about this. Um, so and yeah, yeah, yeah.
SPEAKER_02So but it's key had that have gone with like the cheapest possible solution in the moment because they had and then they regretted that later, or and or had to replace that later. So I mean, all right, that's that's great. That's that really speaks to part one of my question. The second part of the question is because it's called passive house. So I guess like I'm inclined to just think of like a house, but you're building a four-story, you know, multi-unit complex here. And so just uh talk a little bit about like the scale of the economy of these ideas and how you're you know, it's it's not necessarily repetitive, uh, as you've you know kind of highlighted here, but it's uh it's designed in a way that it's at a much larger scale than just an individual house.
SPEAKER_04Yes. So I think that that helps. And also, um, I mean, I think that actually I'm not the genius on how the calculations work, but I I understand that that does help too with um with the passive house strategies. And so and so, you know, yeah, I'll talk about Chicago, but also you should look look to um Pennsylvania and also um Pennsylvania has a number of multifamily passive house projects completed, and New York City has crazy towers that are done. And so I, you know, I I'm a Chicagoan. I'm like, we need to, we're behind on this. We need to catch up. There's a whole nother code, additional code discussions we can. Well, and we're in Detroit.
SPEAKER_02So if things they're behind, like boy howdy like we well, yeah, probably love to point out how far we are behind Chicago, and that usually gets us uh, you know, firelit under some people. Yeah, um, if you could send us some of those like precedents, we would love to drop sure.
SPEAKER_04Yeah, yeah. And I was blown away by New York City, and so and a lot of it was affordable housing too. But the Pennsylvania, the key again was it was once again, affordable housing was leading the way there, and they were the first ones to in the country to incentivize in theirs. Um the funding gets done through uh uh that we call it a QAP, but it's qualified allocation plans that the state prepares, and that's where it's scoring, and all these not-for-profits, you know, compete for this money that I always say is not enough. We're in a housing crisis. But at any rate, um, that's where it gets incentivized. So they were the first ones. And Illinois, I worked with a task force here to look at theirs, say, look, you know, you can put passive house in and say if you only give passive house or living building challenge some of these what I call extreme green programs, one or two more points than doing even lead. They're no one's gonna do it. They're just gonna do lead or or enterprise green communities, which is set up for affordable housing. You've gotta, you've gotta make it huge. And then you got to get people's attention to be like, I need those points to win, you know, uh to win the funding to get the thing done. So um that's a whole nother podcast on that. And um, and I'm always like, who do I talk to about changing how all of this works? We just need more money to build quality housing, right? Okay, so I'm sorry. So back to um uh so we were talking about New York City and Pennsylvania, and I um I'm gonna forget what your other question was, but before you jump back in, Breck, um the fine uh I want to just talk about the windows a little bit too and in cost to use as as an example, which is also really important when you're doing this kind of they insist you do this cost comparison. I'm like, what is your base window? And because I won't allow vinyl windows, they are an interesting thing because they're so bad for the environment and they don't last, they're not durable. But the weird thing is they're energy efficient in the beginning until you until they don't work anymore and you have to replace them, right? Like I kind of're cheap to purchase and install, which is yeah. Well, that's the thing. You can't be that low cost, and then you have somebody going and also they meet our energy requirements. And I'm like, and then in five or ten, I won't allow them on my commercial projects. Um, I'll make the client signs. Like, I'm not responsible if you have to replace these. To me, I don't even approach it. I can't, it doesn't work to approach it from the energy uh point of view because they are energy efficient. So you so I present it from the durability point of view and say, don't please don't do this. You'll again the long term operating costs, do you have a lot? Do you have a reserve to replace all of these when they don't work? Um in a relatively, you know, probably even before your 15 year tax credit window is over. So um, so that's one thing. So then when you want to look at the um the cost of the the triple pay, you know the Triple pane glazed uh windows. Um you're comparing I'm not comparing them. Yes, if you compare them against a vinyl window, they're gonna look crazy expensive. But if you compare them against aluminum, it's almost or fiber, you know, and fiberglass, um, it's which these I think are some kind of form of fiberglass. Um, it's almost not it's nothing, you know.
SPEAKER_02It's a fascinating topic that I I don't want to get too in the weeds here, but like I can guarantee you right now we're gonna have future episodes regarding this because this is this is a really good point, Susan, that it's not about the upfront cost, it's about the upfront cost balanced with the longevity and maintenance of this building. Now we've said time and time again on this podcast, buildings will last as long as people take care of them. So when we get questions on like how long will ship a container building last, it's like, well, is somebody living in it? Because if somebody stops living in it and they stop upkeeping the roof and water gets into it, it's doomed. Like all buildings are doomed. But it's really thinking about, I love that comment of positioning how we think about the cost of a building is not just what you're paying today, but it's what are you paying over the next year in your utilities and your systems? And what are you gonna have to pay for to replace or to renovate and fix five, six, seven years from now because you went with the cheapest option and these things are now failing. I think that that's like a really, really great point that we could take away from today's conversation. Agree.
SPEAKER_03Good. Agreed. Yeah, absolutely.
SPEAKER_04Yeah, and if if you want to maybe switch over a little bit, um, if in terms of like trends or things we're seeing, the electrification, like let's stop using natural gas.
SPEAKER_02I'm seeing that gas has begun. I think we've all seen those headlines, at least in the industry. But it's uh yeah, we're seeing that pretty consistently with as especially our our much, much smaller projects. And I, you know, it really wasn't as much of a question now that we talked about it. It was more just like a comment of like passive house, but you're building like a four-story, like 40 plus unit passive house. It's just like it's not a house, it's just like a way of it's a method of thinking about how you approach design and construction, and that's really more about it. But we have a lot of clients that really are just like, wow, I can just put solar panels on top of my house and eliminate my gas line. Well, that's fascinating. That's like technology's caught back up with us. That's a viable option for a lot of our clients now, right? How are you experiencing that on a larger scale with HED projects? I'm sorry, what was that? What so how is uh how is how is HED approaching like the electrification conversation, the elimination of gas and larger projects? Is this like a trend that you're seeing kind of trajectory?
SPEAKER_04Right. It's it's happening more rapidly, um, at least in the housing, than I would have ever dreamed possible in some ways. And and before we talk more about that, I will um say there's a misnomer about like passive house should probably do a rebranding because my understanding is from way years ago, one of the first educational things I went to about passive house, probably at Greenbuild or something, the speakers explained that um it originally it was passive house, H A-U-S. Uh sorry, the word the German word house, and that um their intent was not that it just be a residential thing, that house in German applies to all buildings. Like it was really meant to be for office buildings and other commercial, but like any kind of typology can do it, but it gets uh stuck, right? Um, because of what it's called. They really should uh they really should rebrand. I'll talk to the the leader in the Chicago area. Um I don't know if you guys have had her on, but Kat uh Katrina uh Klingenberg, I think her name is. I should know. She goes by Kat, but I'll mention that to her. She needs to rebrand. I'm sure she'll love that. But but just to clarify for everybody too, yeah, Pass Up House isn't just for housing. And so um, well, and there are many uh single family homes, there's more of that in the Chicago area than than what I'm talking about. And for the conservatory departments, my project, um, at that scale. So we are the we are the front runners. We didn't mean to be, but we are, and so that's why I'm getting a lot of questions now about it. Um, but prior to us, there is is another passive house project in the city that was a six-flat. And it was done probably seven or eight, eight years ago. It's called Tirolinda. Um, so I was not involved in that project, but uh, but again, so the difference for us is that you know, 43 units versus you know, four stories versus three stories, the scale, like we're we we gotta get it to scale. And um uh so I feel like now I'm not answering your question because I can keep coming up with different things. But the electrification, back to electrification. I'm shocked that it's happening. So conservatory almost is yeah, it's almost a hundred, you know, it does have it, it is electric dominant. Um, or the client likes to say, and it's not their first one, it'll be their second one. He calls it electric centric. But uh, and you know, I and I'm hoping my next ones will will not we'll get we'll just dispose of the gas. But we have a little bit when this was being designed in 2020, um, the trick, the tricky part was one of the many tricky parts, but the the central getting the domestic hot water um to be electric, no one was comfortable with that back then. And now it seems like already, again, in only three years um that we're figuring that out. And the problems around it were uh, and that's actually kind of important for passive house. They really would like you to not have any gas gas. And the the domestic hot water has been the thing that's tripped tripped up teams, um, including us. We just couldn't get get it figured out in time. So at any rate, the and the the concerns were um that the delivery of the hot water in the electric systems that were out there, or however, and I'm not a plumbing engineer or an electrician, but um it it it was like I can't wait uh you know, I'm I'm not gonna wait five minutes for my water to be hot. And there is actually code requirements about this, like that you have to at your faucet, at your shower, that the the water needs to be hot within a certain time, which I didn't ever really think about before, but that seemed to be the the thing. And then again, if it's a single family home and the person, the family that's living there is all on board and gets it and they're doing it like because they want, you know, they want this the passive house certification or they want to be as green as possible. As a small family, maybe you could they all understand, I know, and then I don't know how much water you're wasting while you're waiting for it to get hot. Uh, but with our population that you know, it's it's um it's a vulnerable population that will live at conservatory. Um it's all you know, studios, I don't it's a certain amount or you know, come right out of you know, off the streets and and all of that, they're not um that there's not going to be that level of um of patience, you know, like they have other things they're worrying about and probably they want their hot water in a reasonable, a reasonable amount of time. So, but going forward, like I said, the ones I'm planning now, I think it it seems like uh, and more engineers understand how to do it. So similar to the the inexperienced versus experienced contractor with something, um, makes a big difference. So it's sort of like we're all learning, right? And the once we're we're not just learning, we're changing the way we're doing things, right? We're changing the way we're building, we're um, and we're changing the way we're designing. And um, but but as we change it, once we've done it, the next one's easier.
SPEAKER_03So from your lips, you know, we we were talking earlier about um really about the modularization um effect on housing and how that could be some sort of a solution that we as as design firms can actually I mean we could support, um but we haven't found those right partners yet on the modular side. When with cargo architecture, it's the same thing. There's a few fabrication centers that actually can do some modularization and they um on a state basis get inspected. So it's it it makes sense, but they're they're not at a scale where it's reflected in the cost or the fees. Uh we've had, I've seen, I don't know, Breck, I think including um Chicago, I think we have seen a good, I don't know, half a dozen people start up a modular company firm, and then it just falls flat, flat, flat on its face. And and we were one of them. I mean, we don't uh we decided we're just and our listeners know this, we're staying in our architectural lane, we're staying in the design lane. We've tried fabrication. One of the reasons we didn't pursue it further, it's because there's not a lot of like-minded people wanting to get into the modular arena. And you have got to have some heavy-duty pocketbooks in order to float that. Because initially, in the first year, without economy of scale, you know, your cost per square foot is just so outrageous in order to stay competitive. You have got to reduce your overhead and profit. And that's just so not sustainable. So I think there's a chicken egg delivery service that's so off balance in the modular arena that it won't be able to sustain itself until until there's enough design work and enough projects to float it. We have it down, like we can get cost of construction down if there were 2,000 containers a year that needed to be modified, put together. We understand those numbers. And those that's amazing in order to get those numbers down. But it's not just with containers, it can be done with other types of materials, your zip panels, steel. I mean, there's just so many, I believe, opportunities for a modular. Uh we've, I don't know, Breck and Susan, I'd like to really hear your takes on these.
unknownYeah.
SPEAKER_04Do you want me to go first or do you want to go, Breck? I guess I'm unmuted. I just one's all you. Yeah, let's do it.
SPEAKER_02I'm learning a lot.
SPEAKER_04Yeah. Yeah. Um, no, I agree with you. I've watched the same things. You know, it as I think I said in the opening, it seems like a no-brainer. I don't understand why we can't. And and then the the the companies that appear and we're like, maybe they're gonna be the ones. Um, and there's whether it's political for a long time in Chicago, it was thought it was union, you know, the union always killed it, the union always stopped it.
SPEAKER_02And then the most recent one that um, you know, laughing right now because we went through that exact process.
SPEAKER_04Yeah, yeah, exactly. Yeah, and I think the one that you know was taking off here pre-COVID in Chicago. Um, you know, it seemed like they it was a contracting company that was starting it, a very well-established contractor. And it seemed like, you know, it was very helpful because it seemed like they were doing all that all that work with the unions ahead of time. And so it seemed like maybe, you know, maybe it was going to be the one. And again, hard to say if it was uh I know it it seemed to me that they were just kind of like you're saying, they couldn't get the volume going. And uh, and then you know, COVID, of course, didn't help anything, but um, you know, they went, they in who knows what invested a lot. Uh um uh did a model unit, had that in their factory, they were ready to go. And I mean, I think they they did do some work, but it wasn't they just couldn't get it to scale. And maybe it really was just COVID did them in. Maybe they could have taken off. But but if that were true, then I think they would be taking another crack at it now if if it was that close to really happening. So it is um frustrating, and uh um I'm not sure what we can do about it.
SPEAKER_03I'm not sure either. I'm really not. It will take it would it would have to take a firm in the United States. I mean, the there are companies um out in China and in um Dubai, there's a lot of companies that are doing, you know, purpose-built modular homes, you know, where they'll take a container and they make it two feet wider and they'll do all the all the stuff, um all the cutting and stuff, but they don't have the state stamp. They can't stamp it as a modular build, number one. And number two, once you've modified a um a structure like that, it is not used now to cart materials, tennis shoes and shirts and other things across the waters. So it's not a delivery unit, it's actually a product that has gets charged five, seven, twelve thousand dollars for that unit to be shipped across the ocean. So we've just really blown the cost um efficiencies in a modular. So it we've got to do something in the United States. I think there are a couple of firms that are doing it. I just don't think the volume, I love that. That's it's just not here yet. And until then, we have got to solve this housing crisis.
SPEAKER_02I mean, the cost of that's I that's kind of the volume thing, is like uh I don't know, it kind of irks me a little bit because the volume has the requirements there. Like we have the demand for the volume. So I I'm I'm missing this middle ground, and the best that I can come up with, because I we spent a lot of time talking about this, I spent a lot of time thinking about this, and I I think that a big portion of this is the regulations and rules that are in place because the road to health paved good intentions, and we know why there are codes and zoning and regulations and why the IBC exists. Like, that's all great. I mean, it's protecting people, and I understand that. However, there is no federal rules regarding modular housing, every state has its own set of rules that if I have figured it out in Ohio for one project, I try and replicate that in Illinois, and all of a sudden it's a totally new ball game with new rules of engagement. And it's not even the same information that they're requesting. It's it's a totally disconnected. I these these conversations are just so separated from one another and compartmentalized that I think that that's like one of the major hurdles here because I think if you talk to anybody in this environment, they all agree like there's a housing crisis. So we have solutions proposed. And you know, we can get into the weeds on like how some of these businesses fail, because I think a lot of them are just like, you know, side project startups by you know, some dude who has a lot of money and thinks they're gonna get rich off this. Like that's you know, half the document. That's another one, yes. But the ones that are serious about this and are passionate about this, there is a demand, and somehow they can't scale to meet those demands because I see a lot of red tape in the way. Susan, do you have any thoughts on what I just said?
SPEAKER_04Uh yes. Well, I mean, yes, I who do we talk to? And it seems to me it's at the federal president. But I don't even know if it's HUD, but there's lots of talk, and especially in the affordable housing arena, everyone talks about it all the time, but it seems like no one knows how to cut through the red tape. And there's there, and again, when you're talking about affordable, that's money too. You know, the red tape costs something. And so how can we simplify um everything? And uh, I don't have it in front of me, but um there was a proposal. So I'm I'm a board member with the Illinois Housing Council who works on advocacy and policy in in the state of Illinois, and someone came to us with a proposal this past year, and I actually don't know where it went, but I was like, yes, we need this. But it was sort of like um it was a system, and another state was using it, um, and I don't remember which one, but that it was a simplified way of even within um within a single project, right? There's different funding uh pieces, and then each of within one project, not just move them from one project to another, you'll have those layers. And so that it was a way of just simplifying those that documentation, like, well, if this person asks for the environmental report, I just get it from them instead of like the the repetition or so it's like streamlining. We need to streamline all of that the requirements around um how the affordable housing projects are are reviewed and done, you know. Um, or if if one if one agency reviews uh the state agency reviews my documents and I get their list of comments, why does the bank also do a separate review? That's maybe the more tangible one for me to talk about, right? Well, that's wow.
SPEAKER_02Well, we have uh certainly gotten off topic. That's exactly how these conversations go. I love, love, love being the dumbest person in a room. And today I can confidently say that I certainly am. So, Susan, we cannot thank you enough for your time today. We would love to have you back for future conversations because this is just opening the we just opened a bunch of doors.
SPEAKER_04Oh, yes. A lot of cans. I didn't say cans of worms, but yeah, no, sure.
SPEAKER_02It's been fantastic. Uh, we we appreciate your experience and sharing some of the projects that uh that you are currently involved with and have been involved with. Again, we will be uh sharing a lot of these projects in the show notes as links so you can go and follow along and see some of the stuff that Susan and her team at HED are working on. Uh, we'll also reference a couple of the three squared projects that we mentioned in passing on this call today because we've got a lot of stuff going on and there's some really exciting uh fronts on the horizon. So we're looking forward to continuing this conversation. And again, can't thank you enough for joining us today. Leslie, any closing comments?
SPEAKER_03No, it's been just such a thrill, and I second that you will be back on. We really um have great respect for you and really are thrilled about this, about this conversation and future conversations because I think it's going to be these types of conversations. And if we can start creating more waves and and you know uh pressure for the government to shift and change and support our crises and our passions. I mean, my goodness, this is just about creating a livable space that it's not gonna cost you an arm and a leg to move in and stay in. And so I believe it's these conversations that will make change. That's what I believe. Susan, we're gonna let you have any final words that you might want to share.
SPEAKER_04Yeah, um, it's been great uh to talk with you guys. I'm thrilled that you you know invited me on. Um what else can I say? I mean, it's been a little bit like therapy. It's so good to talk with like-minded people, you know, and like we're gonna solve the world problems in one hour or half hour, whatever, not even an hour, 30 minutes, 30 minutes, we can do it. So thank you guys so much. I'm excited, you know, to reconnect with you all and see what's happened, you know, since uh since we last saw each other before the COVID thing happened.
SPEAKER_02Looking forward to it. Until next time, this has been innovative real estate with Three Squared Inc. and Susan King of HED.
SPEAKER_01Thank you. Right on. Thank you. 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 in the description to tell us all about your project so we can help you get started.