Containers and Modular Construction: Synonymous Solutions for Modern Development

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, or have questions about building with shipping containers? Contact us here and we will put you in contact with the right member of our team.

Make sure to follow us on Instagram to stay up to date on new project releases, trainings, and more. 

Transcript

SPEAKER_01 0:02

Welcome to the Innovative Real Estate Podcast with your hosts Leslie Horn, Brett Crandall, and Claire Olilla. 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_00 0:31

Welcome back to the Innovative Real Estate Podcast. We are your host, Three Squared Inc. today, based out of Detroit and Hawaii, because Leslie's on a little uh work cation there. Um today we are going to be talking about uh modular construction, which is a topic that we've brought up a couple of times uh on a variety of episodes. But the reason why we're talking about it today is because, well, we've been working with modules, Shiba containers, since the beginning, and we're gonna highlight how there's so many overlaps between cargo architecture and modular construction in general. Before we get into it, uh Leslie's gonna highlight a couple of recent events that we have been involved with. Leslie, take her away.

SPEAKER_03 1:13

Yeah, no, thanks, Breck. And um, I know that as a firm, as an architectural firm, oftentimes, you know, we get asked to, you know, talk to some groups and other things, but I'll say lately Breck has been on fire. Uh, just the other night was asked to come back to WDTV uh and discuss some of the happenings going on in in our neck of the woods for affordability. And Breck, the reason I wanted to highlight this, in addition to being on a panel at the Fort Wayne um Innovative Summit, it was uh in Fort Wayne, there's four houses, just for context, everybody, there's four houses that are being built and supported by the city. J.T. King, who's been on our podcast, is the developer on this, and he's working really close with the city of Fort Wayne to create these four models. And Three Squared has uh designed along with home two of these models. And I think it's really relevant not to talk about a specific project, but given today's topic, really highlighting the conversation about why modular makes sense and also bridging the gap between what 3Squarts have been doing from day one in a modular design process. And I think your conversations I think the reason you're being asked to come on stage to talk and to address these, it's because first and foremost, Three Squared's doing it. Uh, and secondly, it is so relevant to today's economy and to today's you know, lack of affordable and attainable housing, missing middle, whatever you want to call it, there is a lack of housing. And I believe under your leadership and your design prowess, the actual affordable and attainable housing module is really where it needs to be. And so I wanted to talk about that. We're gonna put in links to to at least the the WD uh E T V W D E T. W D E T T V. The the the it's a actually, you know, I didn't realize they even have that on NPR, but I listened to it yet from what you shared yesterday. And man, it was simple, it was very succinct, uh, and actually uh it brought a lot of clarity. I think I think our listeners will really like that if they want to spend another 10, 12 minutes listening to that interview. It was really, it was really capturing. Thank you. So that's what I wanted to highlight.

SPEAKER_00 3:52

And then yeah, that was that was a great opportunity to to get on the radio and to to chat with local host Nick Austin. Great dude. Um, for whatever reason, he likes us and keeps calling us back. Uh, as it pertains to the innovative housing summit, uh, I thought I was gonna talk in a panel discussion to like 30 people and uh Scott Shaw and I both presented to represent Three Squared and Home. And we showed up and there's a room of 650 people, and they put us on a main stage right in front of it. You know, we both thrive in that environment, so it was a lot of fun. But you know, we were on that panel with two other innovative housing solutions. Um, so we got to actually present as like a group of four panelists, each representing a different housing solution. Because yeah, our team's doing a lot, Leslie, but it takes an army, and the shortage of housing isn't gonna be solved by any one group or any one solution. I think we all need to be banging on all cylinders to be able to figure this out at scale at large. We we just need housing, period.

SPEAKER_03 4:51

Yes.

SPEAKER_00 4:51

On that note, the future of housing will be modular housing. You could disagree with me all you want, but I'm sorry you're gonna lose this argument. It's how the building industry is heading. If you've built anything, if you'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. And if you look to historically, Europe's always like a decade ahead of us when it comes to building solutions. They've been doing modular for decades. All right, they've been doing this since like you could track these back to the 40s where they've been putting concrete modules in most of Europe, starting in Germany, uh and Japan's been doing this forever. So there's a whole area of Asia that's been building modular forever, and it's still like a relatively new thing in the United States, uh, that a lot of people are apprehensive to. Part of that, and we'll get into it, was a little bit of the red tape around that scenario and how it's characterized, which I know we've talked about at length on other episodes. But I do just want to preface the conversation with we're heading towards modular because modular offers you a solution where you're doing more off-site and less on-site. Because the time you spend swinging hammers on a job site, as we know, time is money. And if we're going to reduce costs of buildings, that means we have to build where labor is cheaper and we have to do it in a more efficient manner. And why do we build cars the way that Henry Ford changed us to build cars? Because if you were to take all of the pieces and send all the pieces to a garage and then assemble the car there, it wouldn't make as much sense as if it came off an assembly line. What a novel concept they had that buildings have just uh, I guess, never wanting to uh adopt that form of construction. But that's where we're heading. Uh, we will bake, we'll make buildings more akin to the way that we build automobiles, aircrafts, just about every product that you use in a factory setting. And then we'll deliver that to the job site. Leslie, any thoughts you'd like to add on top of that before I continue diving in?

SPEAKER_03 7:03

No, I think I mean, I uh uh no, I mean, you're you're on target, and it's interesting because ever since we started with cargo architecture, and this is even you know, like in 2008 when we saw the the methodology in Amsterdam, right? Because you're right, Europe had been doing it in 2000 and when we learned about it in 2007 and eight, Amsterdam had already been doing it for over 10 years. I mean, like Europe is just so leaps and bounds ahead of us. And one of the key elements is off-site work. So that's the key. I mean, that's part of it. No delays, it's all done in a safe setting, a controlled setting. You can order all the materials in super big, you know, bulk. So I it's it's the right path for us to take. Keep on going. Thank you. I just wanted to add that, but this is this has been happening for decades. You're right.

SPEAKER_00 7:57

So obviously, we've done work with shipping containers, got 30 plus buildings under our belts, but we're also working with a number of other materials. We're we're architects, so we have to follow the trends and we have to educate ourselves constantly on the up and coming. And we're constantly learning. If you have ever gone a day without learning something, uh, as we like to say on this team, you've wasted a day. So our experience with shipping containers has taught us a whole lot. And let me give you a brief history uh on why that is. It's because shipping containers are a ubiquitous module that have been accepted by every single country around the globe. They're one of the few objects that can be received and sent virtually anywhere on the planet. And now you think about them. I'm gonna give you what's called the Bader-Meinhofer effect, where now that I've talked about shipping containers, you're gonna be on your drive home and you're not gonna be able to get home without seeing a shipping container. And then you'll start noticing them everywhere. You'll see them on the road, you'll see them as storage units, you'll see them in stacks, by the freeway, all over the place, in buildings, wherever. And that's because they are everywhere. They are how everything in your life got to where you are, essentially. I'm talking like look around you. You see a pencil, a pen, a plant, a lamp, like all of these things probably were shipped to you from their point of origin to the United States, taken into a port, and then unloaded. So the module of a shipping container dictates a lot of the built environment that we use for transportation. Why are bridge heights the heights that they are? Because a shipping container would hit them if they were any lower. Road widths, uh, the chassis of trucks on the back of semis, uh, the ships that are used, which then dictate the widths of locks because these container ships have to like it, just goes on and on and on. And that dimension is eight feet wide, 40 feet long, and eight and a half to nine and a half feet tall. Okay, and so that's what dictates 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 chunks off-site and bringing that to the job site, chances are you're probably gonna be working close to that module. You know, sometimes they're a little bit wider, a little bit longer, but all in all, you're working with a very similar rectilinear shape of a shipping container because the whole world is meant to move those objects, right? So whether you're building your modules out of wood, steel, concrete, foam, it's gonna be similar to a shipping container. So when we say that we've done work with shipping containers, you can roll your eyes, you could tell me it's silly, you could tell me it's not gonna save any money or time, and we could talk about it. We've learned a lot of lessons over the years, and there's great stuff about them, and there's challenges about them. But what I want to focus on is the fact that because I am so comfortable with that module of a shipping container as a building element, and because our team has been working with them for over a decade now, we know how to do modular construction full stop, right? Because it's all one and the same when you think about it, when you back up and think about it. There are intricacies about shipping containers, but what I what I'm trying to say is like there's so many overlaps to modular construction that if you are looking into modular building, we could be of service. So let's define modular construction and what actually sets that apart from a site-built construction and some of the challenges with the red tape. So, Jill, our lovely project manager here at Three Squared Inc., and the one who is directing a lot of behind the scenes efforts and the logistical coordination on these projects. Jill, could you define for our listeners what the difference is with modular construction versus site construction and some of the challenges and approvals for modular construction?

SPEAKER_02 11:46

Yeah, I think the biggest difference in modular construction is the there are typically state level approvals that you need in order to construct that way. And then there are additional inspections that are required. So you're going to have an inspection that's going to have to happen at your facility when your walls are still open. So you can't close in because you still have to be able to get access to your mechanical electrical plumbing systems for those inspections to pass. And then you typically also need an inspection once you bring those modules modulars to your job site. On-site construction is exactly that. Everything that needs to happen on the site is going to happen on the job site to get your building built from the ground all the way up. So I think another huge difference there in modular construction, you're always in a controlled environment. The temperature is consistent, the work hours are consistent, you don't have weather delays that you're going to see on a job site. So those are some of the main factors that allow you to take full advantage of modular construction technologies because you're not going to be faced with all of these delays that you might see on a job site when you're exposed to all of the elements and you have like certain time periods that aren't ideal to build. It doesn't matter what time of the month you're building when you're building modularly. The state level approvals, typically you have to work with certain contacts that have those approvals in order to get you to move forward. So we kind of know that process and know how to get you through the modular process, but we also know how to get you through the building on site. And what we're saying is that it's just looking more and more feasible to get your project built off-site because there's many more advantages. And that's how the future of construction is, and we're here for it.

SPEAKER_00 13:35

So, simply stated, the difference between modular and site built is that your modules that are coming to the construction site have everything in them. They've been plumbed, they have your mechanical units, they have wires in them. Oftentimes they have doors and windows, and your interior and exterior finishes. Like it's a finished building. They say plug and play a lot, right? Like obviously, there's always something that has to happen on the job site. You have to run water to it and make sure your waste goes somewhere. You have to run electrical power lines to it, and you have to have foundations to set them on. But increasingly, we see modules uh for construction like this that actually have the roofs attached to them. Now they're really awesome solutions where some of these roofs go between two modules and they like flip down after you've set the module in place. There's a lot of solutions there, and we're going to continue to get there. The problem that Jill is speaking to is that we live in a country that is actually like 50, like 54 countries and counting. And then every city in each of those states have their own set of rules. And so when you get a building approved in your local municipality, it's going to be different in Detroit than it is in Fort Lauderdale, Florida. Some of these are easier and more lax. Some of them are very, very strict and have a lot more hoops to jump through and a lot more red tape, depending on where you are in this great country. And so they have yet to establish blanket rules for things that are built in a factory. Because of what if one factory, for instance, in Denver, Colorado, is shipping buildings to the rest of the continental United States? Like, okay, how do we get that approved? And what Jill's referring to is the people that approve those have to go to where the building is being built and approve it there, which is just a different process. So again, we're we're playing a little bit of catch up. There, there will eventually be federal legislation that will allow modular construction across all of North America, just like we have building codes that apply to all of North America at once, because we have similar conditions, we have similar rules. But until we get there, we have to navigate through the red tape, which is often the biggest challenge in this industry. And that's where we come in. That's where we help, is because we have those connections, we have those contacts. It doesn't matter who your modular builder is, your modular builder still needs an architect to put plans together. They're just architecting within the confines of their modules. And everybody has slight differences to their modules. But again, I'll point back to those modulars are going to be strikingly similar to the size, shape, weight, and dimensions of a Shiva container. So you give me a modular building solution. We can work with that as an architecture firm and design it because there's still a lot of design. Like you can have modules that could be very blandly dressed just to get it done, or you could 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 you respond to the site's context. All of that can still be designed within a modular provider's modules. And then you put the design together, and then we have to go through the approval process. And depending on where that manufacturer is coming from, and it might not even be in the United States. We're currently working with uh with modular providers that are in other countries and even overseas. Like those are possible solutions. Because, as Joe and Leslie both stated, building it in a factory is a huge benefit because you can buy in bulk. Why are things so much cheaper at Costco and at IKEA? It's because they're buying in quantities of millions, not in dozens. So you're getting bulk pricing on materials. All of your tools are there. They're all connected to the power. There's no running generators out there, there's no temporary power solutions. Everything you need is at your fingertips in order to build. And then you're under a roof. You don't have rain and snow and weather issues. You can just keep going. And so the quality control is also superior in that environment because you don't have those delays. You're not climbing up on ladders to build things on the fifth story. You're building that on the ground, delivering it to a job site and lifting it into the fifth story. And so there's a lot of benefits that continue to pave a path forward that modular construction, we strongly believe, will be the future of at least housing construction. I guess I should have clarified. But I mean, if we're talking about a desperate need for housing, I can't think of a better answer than an assembly line setting where you're building in a controlled environment and then delivering those with consistent quality and on a very consistent timeline to a job site. So now when we build the modules, got a good quality of standard, we got to get them to the site. So, Jill, can we talk a little bit about the benefits of the logistics when you're working with a set unit and you're delivering these to a job site and how we get them into place?

SPEAKER_02 18:44

Yeah, because going back to your conversation about how shipping containers determined the units of transportation, they're a ubiquitous model that determined measurements for so many things. It's the same thing for module units that need to get to a job site. It's all of the same components. It's almost apples to apples for getting a module for modular construction to a job site. You still need a truck and a logistics company to get your units there. You still need mechanisms for loading those units onto and off of trucks. And then you also need equipment to offload when you're on the job site. So you likely need a crane and there's going to be hooks on these modules that you have a certain clipping mechanism and you're getting those modules and setting them into place on a foundation that's already been set. So all your site work is already done. Your modules are the plug and play components that are all going onto your job site. It's the same thing with containers. So we speak the exact same language as these modular companies. So it's a really interesting dynamic that we're already set up for success. Um, Breck, there were a couple of other things that you had mentioned when you were going through the advantages of working in a facility for modular construction that I also just wanted to contribute really quickly. There's a huge difference between union and non-union, non-union labor because there are exceptions in a facility versus when you're bringing people to a job site, sometimes those rules change. So that's another big difference as well.

SPEAKER_00 20:17

Yeah, speaking of union labor, you gotta love them. You gotta have your frustrations. I mean, when I get DTE to come out to my job site, I, you know, I'm lucky if I get one guy. But when the city comes in to run my gas line for the house that I'm building up the street here, 15 people showed up in six trucks. They had two traffic controller trucks to run a gas line, and that meant that 14 people were standing around a circle with one person you could cover. These are the kind of situations that we'd like to avoid in using your taxpayer dollars towards unnecessary labor because the market's controlled. So you're actually giving the advantages back to the power of developers. And and Leslie, I want to give you an opportunity to speak on this. Jill, I just want to hit home the last point you made is really it's time. Time is the one major thing. Like, can we guarantee you the modular construction is gonna save money? No, and it might pose some logistical challenges, or you might have to cut through some extra red tape because not everywhere has fully accepted these. However, it will happen faster. Your construction is gonna happen faster. So, Leslie, from a developer standpoint, as we wrap up this conversation, what do you say are some of these advantages and why should they be looking towards modular solutions?

SPEAKER_03 21:36

Well, it's time. I mean, for me, it would be just time and time alone. Um, the time that it takes to set your project, you're weathered in, and you finish up and wrap up. You know, they did a study um back in the day with Travel Lodge, did this study on the travel lodges that were being built in Amsterdam. This was in the in the like Late 1990s, um, early 2000s. And the study said this. They said they would they vowed to build all future hotels, travel odds hotels from containers, or modularly, I should say, at that point, because they had taken containers and made them into a modular hotel. But they vowed that because on average they were saving between 23 and 26 percent on their bottom line when they factored in three things. Number one, the time that it took to frame. Number two, the cost of materials went down because economy of scale, which we've already talked about. And then finally, number three, the amount of money they would have never had. They added the six to eight months 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 with that. That's why. This is why. This is why a developer really shouldn't want to know more about modular. You know, in the past, I can tell you right now, if you'll recall the old tiger stadium when when um when that part of the building was modular.

SPEAKER_00 23:13

And even they replaced the tiger stadium when they didn't at that time, at that 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 for modular. It has gone up today. And and and modular, even though we see a lot of modular housing companies, you know, from$125 a square foot. Um we call bullshit on that. I mean, we really do because they don't take into consideration all the other fees. I mean, we could do the same thing, but it's not for us a way we would want to deliver the information. People want to hear the total cost, not just, oh, the actual construction, because people don't and cannot correlate the two. A number is a number is a number. Bottom line is all developers should really take a look at modular, at least a stepped approach into modular. Do some of your some of your work on site, but get get the framing done. It's it's available on so many levels with the with the SIP panels that that you've brought, the steel, the steel enforced ones, um, in addition to containers. I mean, steel framed, we're using volumetric steel framing, but there's just so many opportunities right now to bridge the gap right now to speed up your cost of construction. Um, and I mean to speed up your cost 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 with modules. Yes. Uh, because the more restrictions you have, the less decisions there are to be made. And the less decisions we have to make, the faster you can move through design. Because how many modules can I lay out on the site? How do we want to divvy them up? How many units do we want? You can add them, you can take them away. And that actually can back you in your pro forma uh when you're at that point in a project, when you're actually laying out the numbers and trying to make this pencil. There's always this age-old back and forth conversation between developers and architects where they'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 kind of units? Well, if you're working with modules, it's very easy to come up with a baseline, run the numbers, and say, actually, I need more of this style of unit. I need less of these. Like, how many projects do we see start here and then end in a wildly different place, whether that's scaling up or scaling down? Well, modular can respond to those changes very quickly and not have to go through all of the steps of like, oh, I got to scrap this entire design and start over. So that's another benefit uh as a whole. So wrapping up in conclusion, modular construction means that as much of the project is done off site as possible. And that often includes everything from soup to nuts, a plug-and-play operation. It happens faster and has better quality control. And there is virtually no difference between container architecture and modular architecture. Container is just one of the modular approaches among many that we've covered here today. And we could give you specific examples on. And if you're a developer and you don't have a modular solution selected and you're curious to know more, reach out to our team because depending on the climate that you're building in, the municipality and the rules of engagement, we could probably point you in the right direction and tell you who a good partnership would be with one of these modular solutions. It might be wood, it might be steel, it might be containers, but we can help you find that solution, find the partnership, get a design done, and speed up your construction timeline. All right, King, until next time, we'll see you on Innovative Real Estate with Three 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 in the description to tell us all about your project so we can help you get started. And to get notified on the next episode here on Innovative Real Estate, go ahead and subscribe to the podcast on iTunes so you never miss a beat. Get out there, put today's advice into action, and we will see you in the next episode.