The Real Deal New York

Affordable is going mod: City wants developers to take on prefab construction

There are some obstacles, of course
By Kathryn Brenzel | March 01, 2018 07:30AM

From left: 461 Dean Street, citizenM and Carmel Place (inset: Alicia Glen)

In 2012, Bruce Ratner claimed Forest City had “cracked the code” on modular technology — a phrase that would come back to bite the developer as litigation, delays and other issues piled up at 461 Dean Street, the city’s first prefabricated high-rise. Now, noting the troubles at Pacific Park and elsewhere, city officials are aiming a little lower.

The city’s Department of Housing Development and Preservation on Thursday will issue a request for information and interest in building modular housing for low-income tenants and seniors. Deputy Mayor Alicia Glen said on Wednesday that the city aims to “crack the code” on mid-rise multifamily development, in the hopes this will be “a new chapter for modular.”

“One thing we’ve learned is don’t try to do high rise,” she said. “That’s a nut we’ll crack later.”

A representative for Forest City declined to comment but noted that “461 Dean Street is today a productive and well-leased asset that is providing much-needed affordable housing to Brooklyn.”

As part of the city’s revamped housing plan that was released in November, HPD said it would start looking at micro-unit and modular construction as faster and cheaper ways to create mixed-income housing.

The city got its feet wet in modular construction through the city’s Build it Back program. After facing years of rising costs and delays, officials turned to modular to restore single-family homes walloped by Hurricane Sandy, mostly in Queens, Brooklyn and Staten Island.

Glen said the ideal sites for these multi-family modular projects will be those in lower-density areas (zoned for low- or mid-rise) and that have adjacent sites that can be used for staging areas. Since building materials are pre-fabricated, they’re often bulkier and require additional storage space. HPD plans to also identify city-owned sites for developers to build modular housing complexes.

There’s also the issue of the lack of modular manufacturers in the city. Forest City sold its business to Full Stack Modular two years ago, which appears to be the only multifamily modular manufacturer in the five boroughs, following the exit of Capsys in 2016. Roger Krulak, who led the modular division at Forest City and later founded Full Stack, told Curbed in October that his firm is building several modular projects in the city. The company, based in the Brooklyn Navy Yard, focuses on mid-size developments spanning between 10 and 45 stories.

“We are trying to do it differently and we think we have the model to do it differently,” Krulak recently told Curbed.

Glenn said lenders also haven’t been eager to provide financing to modular projects in urban areas, but the city hopes that subsidies and tax breaks available for supportive, affordable and senior housing will entice developers and help allay some of the perceived risks around these projects. HPD’s request for expressions of interest also states that the agency will work with development teams to fast-track these projects to target mid-2019 closings.

In the past, the building trades haven’t been too keen on prefabricated construction, since it could lead to thinner workforces. The deputy mayor noted that a majority of the city’s affordable housing projects are already open shop.

“We’re not displacing any union work by doing this,” she said. “We’re not trying nor do we have any interest in eating into the union market share on the residential side.”

A handful of modular projects have already sprouted in the city. Under the Bloomberg administration, Monadnock Development was able to skirt unit size requirements to build Carmel Place, the city’s first modular micro-unit building. In December, citizenM — which is being billed as the city’s tallest modular hotel — topped out in the Lower East Side The latest renderings for Camber Property Group’s rental building at 1601 DeKalb Avenue in Bushwick feature a modular design, as reported by New York YIMBY.

Jonathan Rose, an affordable housing developer, said that his company isn’t currently looking into modular but endorsed the ideas of trying out something different.

“We essentially build the way we did a century ago,” he said. “It’s time to get with the 21st century.”