This 50-unit apartment building in Salinas was built by Fresno-based Zumwalt Construction, Inc. using modular sections—floors, walls and ceilings constructed in Idaho, trucked to the Coast and assembled, saving time and about $1.6 million on construction. Photo by David Castellon.

published on June 22, 2018 - 1:48 PM
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For many people, their first recollections of modular buildings were cheap, nondescript, rectangular buildings rolled onto schoolyards — or similar-looking homes — that began popping up in 1970s and ‘80s.

In fact, modular homes have a much longer history, with Sears, Roebuck and Co. having sold more than 70,000 such homes — essentially “kit” homes where about 30,000 pieces were provided, including the lumber, nails, drywall, shingles and paint that the buyer needed to assemble into a house based on a detailed instruction manual — from 1908 to the 1940, according to the Sears Archive.

After War II, modular building gained popularity, particularly with the advent of prefabricated sections that could be assembled with less work. Recent innovations have particularly elevated interest in modular buildings, which have evolved to the point that Fresno-based Zumwalt Construction, Inc. is assembling its first modular apartment project — a trio of three-story buildings that will house 50 low-income apartments once it’s finished later this month.

But the apartments aren’t being built in Fresno or even in the Valley. Zumwalt Construction, which does work across California and Hawaii, is building the Hacienda 3 apartments in the city of Salinas.

“Modular construction, its’ really starting to find its own now,” said Kurt Zumwalt, the company’s president and founder.

With communities across the Valley facing increasing need for low-income and multi-family housing while also dealing with increasing costs to build, Zumwalt said modular apartment building may be a solution developers here should consider.

“It’s driven by cost. If you want something inexpensive, you go with modular,” he said, noting that the apartments his company is building in Salinas are expected to be about 10 percent cheaper than it would cost to build by traditional construction methods, for a total savings of about $1.6 million.

“It’s not a huge difference, but it helps,” added Dana Hester, the project manager for Zumwalt Construction in Salinas.

Zumwalt noted that developers, who are getting tax incentives to construct the Salinas apartments, originally planned a traditional, “stick-built” project, but doing so would have been too expensive for their budget, which is why they opted to go modular.

Had the building been planned out from the start as modular, Zumwalt said the savings might have totaled 20-25 percent.

A cheaper build doesn’t mean this building will look cheap or be of lesser quality than a stick build, Hester said.

The developers didn’t have just a few, boxy designs to choose from, like in the early days of modular buildings.

Idaho-based Guerdon Enterprises, LLC, which manufactured the exterior and interior sections of the apartments buildings — walls, floors and ceilings — offers a wide variety of designs or will design to customers’ specifications up to four-stories tall, he said.

“Known as one of the only modular building manufacturing companies capable of building medium to large, multi-story projects with a primary focus of using modular construction methods, we provide unparalleled design, engineering, and construction capability and experience for our clients,” states the website for the company.

After Zumwalt workers constructed a foundation and a parking garage, the pre-fabricated sections of the building were laid out and assembled on top using a crane, with the workers connecting and screwing together the sections and installing electrical, plumbing, ventilation and utilities in the spaces provided.

Hester said the interior walls were pre-painted, with workers having only to seal corners with plaster and painting them, while a similar process using plywood was done outside to connect and seal the exterior walls before stucco or cement siding was laid over them.

In the end, the buildings look anything but bland, while the interiors look no different from stick-built apartments.

As for the quality of the build, Hester said in his opinion the modular units are as safe — if not safer, in some respects — as stick-built units.

And they were quicker to erect, with a less than one-year build time compared to the estimated 18-months it would have taken for a standard build, he noted.

And it’s not just apartments that could be built modular, as Hester noted he has helped build a modular medical office building in Stockton for a previous employer.

Both he and Zumwalt said not a lot of specialized knowledge beyond what experienced builders already know is needed to build large, modular buildings.

Both men said that after Zumwalt won the construction bid, Guerdon sent representatives for a little more than two weeks to provide training, some of it hands-on at a modular build in the works.

“We simply tie the components together,” said Hester, adding that it helped to have experienced crane operators on the site.

He added the whole Hacienda 3 project will end up using only about half of the workers needed for a comparable, standard build.

So why aren’t developers looking at modular to build more housing in the Valley, particular subsidized projects for low-income families paid for with government funding?

After all, one of the chief complaints about projects receiving government funding or tax breaks is that developers have to pay prevailing wage to workers, which generally is higher than the market rate paid for workers on privately-funded builds.

Since modular sections are purchased pre-built, the workers in Idaho or wherever they’re made don’t have to receive prevailing wages, just those workers involved in the on-site construction and assembly, Zumwalt said.

He added that costs stemming from the prevailing wage requirements can add 25-30 percent to the labor budgets of affected construction projects, making it more difficult to build new, subsidized housing, said Preston Prince, CEO of the Fresno Housing Authority.

“We are seeing projects get to the $300,000-plus per unit cost,” he said, noting that Fresno City Council Member Steve Brandau said recently about an affordable housing project in the city that for this kind of money, a resident could be bought a house and a motorcycle.

Prevailing wage — on top of general, overall construction costs in the Valley — has been going up about 15 percent each of the past three years, Prince noted.

“What we’re seeing from other modular developers is that they’re necessarily seeing the cost savings,” he said.

But even if significant savings could occur, Prince said, “The other part is I think about employment, right? That 50 percent of construction for modular is done in Idaho. … I have to think about the high unemployment rates we have in Fresno County” and the jobs lost here by not fully building multi-family housing here.

Zumwalt agreed the job issue creates a challenge in getting local government leaders to support modular construction projects, “and developers like to keep all the labor local, rather than send jobs to Boise.”

This position isn’t so strong in Salinas and other parts of the Central Coast and Bay Area because building there is so much more costly that the ratio in savings from going modular would be higher than here, he said.

“The labor cost in the Valley are less than the Bay Area or the Coast,” resulting in less inclination among local developers to push to build modular apartment buildings here, Zumwalt said.

And he has seen no signs of this attitude shifting, “So we are not seeing [large-scale] modular construction here.”


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