Modular Construction In New York City, Once the Future, Is Fading

As 2015 came to a close, a development hit the market to make the case for modular construction in New York City: Carmel Place, the city's first all-micro-unit building made up of 55 modular units constructed at the Brooklyn Navy Yard. Construction at the Kips Bay site began in 2014 and apartments were ready to be "stacked" by the next spring. Stacking the micro units only took about four weeks and the finished product, by Monadnock Development and nArchitects, was deemed impressive upon its launch this November. And in a city that's pushing an aggressive affordable housing policy, being able to quickly stack apartment units seems like one viable way to quickly build. But this March, the company that designed said modular units, Capsys Corp., will shutter its Brooklyn Navy Yard warehouse due to rising rents, after finishing a modular development in East New York. That leaves one modular manufacturer in the city, Forest City Modular, which announced potential layoffs for this year.

Robby Kullman, manager of Capsys Corp., is not about to lament the decline of modular construction in New York, even though Capsys is about to sell its intellectual property to a Pennsylvania company, discontinue the business, and close up shop in the Brooklyn Navy Yard after 20 years. "The demand is really high," he says. In the past four weeks, notes Kullman, 12 different companies approached him to inquire about modular construction. And it makes sense, considering that if done correctly, factory-built housing promises more environmental efficiency in construction, affordability, and shorter building times.

"The biggest challenge is that New York City is an expensive place to do business," says Kullman. It's become impossible for Capsys to stay in New York because of drastically rising rents, plus the large amount of space required for a modular factory—ideally 180,000 to 200,000 square feet, according to Kullman. Capsys was renting 100,000 square feet for around $4 per square foot, which is reportedly well under market value for the industrial park. The Navy Yard decided not to renew its lease to give the space to another tenant, Steiner Studios.

But, as Kullman points out, the modules don't have to be constructed in New York; part of the appeal of modular construction is its portability. The Stack, a Washington Heights development, was built entirely in Pennsylvania by Deluxe Building Systems. Fifty-six modules, constructed and outfitted in a controlled environment, were shipped to the construction site after the foundation and first-floor supports were built, and hoisted into place in a mere 19 days. Currently under construction in Poland are modules for the Pod Hotel, set to be shipped to Red Hook, trucked to Williamsburg, and then stacked on Driggs Avenue this year. "A few years ago, I never thought a project like that would happen," says Kullman.

Of course, just because modules can be shipped from around the world doesn't necessarily mean developers and architects want to go that route. The European company building the Pod Hotel modules, Polcom Modular, was chosen for its familiarity in modular hotel construction. But Jim Garrison, principal at Garrison Architects, who previously worked with modular for New York's post-disaster housing prototype, says working overseas "has not been easy." It's a big benefit if architects can check in as modules are assembled; regular check-ins can't happen if the process takes place far away. In one instance, Garrison Architects found Polcom's structural frames on the modules to be inflexible and inefficient, and Garrison's design team needed to develop frames that were much stronger and lighter.

Shipping or trucking in modules from far distances can also add extra time or costs to the project, and then there's a matter of storing them once in New York. "The more demanding thing [than transporting them] is how the modules are stored and choreographed at the building site," says Garrison. "They have to be in a regular queue so they can be lifted into place on a predictable schedule."

Architects face other learning curves when building modular. At Carmel Place, the city had to waive zoning and density rules to allow for prefab construction—zoning called for a setback at the fifth floor, but "modular construction is continuous and goes against that," says Ammr Vandal, of nArchitects. "Construction was very difficult when doing it for the first time," she says. Also, because modular units are stacked on top of each other, the floors are significantly thicker than conventional floors, meaning that modular projects end up being taller than normal, despite having no additional square footage. However, Mayor de Blasio's proposal to amend zoning for affordable housing aims to increase building heights, an incentive designed to make modular construction more attractive to developers.

With Capsys closing, the spotlight is now shifting to Forest City's modular team, which is currently at work on B2, the 32-story modular tower in the Pacific Park mega-development. When the project was announced in 2011 it was said to be the tallest modular high-rise in the world; since then, a 57-story office and residential modular tower opened in China. "I would love for Forest City Modular to become wildly successful," says Garrison. "It would make things much easier for us." The division emerged in 2014 after a legal battle between Forest City Ratner and Skanska, the massive construction company that was tapped to work on B2; after several lawsuits, Forest City assumed control of Skanska's modular division, which also operates out of the Brooklyn Navy Yard.

FC Modular faced a monumental learning curve in designing a modular high-rise. Unlike lower-rise modular buildings, the tower requires an internal steel bracing frame to support all the modules stacked on top of one another, allowing the structure to meet seismic codes, wind-load and lateral-bracing requirements. Simply put, the construction process is a lot more complicated than the fast-paced "stacking" that's come to define other modular projects. FC Modular's inexperience with the type of construction, not to mention the conflicts with Skanska, have caused construction hold-ups. As Garrison says of the delays: "They picked a very difficult project without ever doing modular." (Garrison Architects is not part of the B2 design team.)

Susan Hayes, the president of FC Modular, is hoping that B2 will become "the most powerful advertisement for modular" upon its completion. "Today, we have a number of potential [modular] projects in the pipeline that we hope to announce in the near future," she said in an email. But the company is facing hurdles of its own: In December, it announced potential layoffs for more than 200 people if more work didn't materialize for the modular division. According to Hayes, "These potential layoffs are a reflection of a cyclical industry. However, it is our ultimate goal to create a pipeline of work at the factory that can support the workforce on an ongoing basis." The biggest hurdle she sees in the growth of modular in New York? "A dearth of available, affordable space, which is necessary for a modular construction factory."

Another thing to remember: the modular market is about much more than housing units. "The volumetric boxes—housing modules—are flashier and show up in the big stories," said Amy Marks, president of XSite Modular, a New Jersey-based company that consults for prefabrication projects around the world. "There are an infinite numbers of prefab construction elements possible"—anything from pre-fabricated electrical wiring to stairs to bathrooms. The industry, she says, is on the upswing, but "there's still a gap in the skill set." Marks brought up the Pod Hotel modules, being constructed in Poland before the shipment to Brooklyn. "Other countries are innovating faster, and bringing it to us," she says. "The demand for pre-fabrication is there, and eventually U.S. consumers will start looking for it elsewhere."

To Vandal, there's the lingering question of, "Can construction and design teams make this leap [to build modular]?" Garrison echoes the sentiment: "We need one or two projects that can establish a good modular system and approach…a building needs to first demonstrate the advantages of modular."