Can This Chicago Apartment Factory Make New Homes Affordable?

 JUL 8, 2019, City Lab, ZACH MORTICE

Skender, an established, family-owned builder in Chicago, is making a serious play in a sector associated with young startups: modular construction. The company is building steel-structured three-flats, a quintessential Chicago housing type that consists of three apartments stacked on top of each other in the footprint of a large house. It believes it can deliver them faster and at lower cost at its new factory than by using standard methods of construction.

Skender’s 100,000-square-foot factory on the Southwest Side, which began production in late May, contains four bays with hulking gantry cranes overhead, as well as welding jig tables that are dozens of feet long. But don’t look to be wowed by sci-fi feats of robotic automation—there’s not a robot in sight (yet). Instead, the technology is aimed at seamless coordination.

Spaced at every few columns, the company will install media screens that workers will use to check off each step in the building process. “Every step and instruction in basically built into an app,” said Stacy Scopano, Skender’s chief technology officer. “If each crew gets off-sync, they can project [it] onto the TV, show the drawings, [and] float around the model. And over time, as we’re developing and modernizing these platforms, that’ll be how we’re watching the productivity of the install.”

Even with humans and not robots doing the work, the company is confident that continual refinement will yield efficiency. A three-flat apartment building can now go up in 90 days, Skender claims, instead of nine months. Swanson estimates that the three-flats will cost $335,000 per unit to build, not including land. In time, company leaders hope that economies of scale and increased efficiency will bring down that price.

The company has been investing in design talent as well, hiring Tim Swanson, formerly of the architecture firm Cannon Design, to be its chief design officer. That allows it to combine design, manufacturing, and construction within one vertically integrated system.

There’s an age-old tension between architects’ craving for creative freedom and the efficiencies of standardization, which Swanson greets with a taboo acknowledgement: “Eighty to 85 percent of our buildings should be the same.” Because codes dictate how many individual elements come together, buildings are well-suited to modular repetition, he says.

At Skender, this repetition begins once an order is placed, and staff begin identifying the relevant components and writing assembly-line schedules. When materials arrive, numbered and bundled with an instruction set, they’re laid out on massive welding framesthat allow line workers to affix clamps that secure steel elements. It’s not super-high-tech, but it means that welds can be accurate to 1/1000 of an inch. (“If I’m out on the dirt at a site, I’m talking about 1/16 of an inch at best,” said Scopano.)

These elements are carried by gantry from station to station as fabricators log each step of the process in the system, via the media screen. “We can watch the efficiency of a specific task, for a specific weld, for a specific corner, and just keep going. The granularity of data we’ll be looking at and analyzing will be pretty fun,” Scopano said.

Company leaders expect to install some automated welding by the end of the year. They plan to use data they gather to isolate the “squeakiest wheel” and fix it with automation, “rather than carte-blanche throwing robots up and down the line,” according to Scopano.

Peter Murray, Skender’s president of manufacturing, anticipates a five-day construction cycle inside the factory before each unit is fitted together and loaded onto a truck. Units will leave the factory 95 percent complete. On site, the apartments will be stacked together with a bolt-and-pin system and some additional welding. Facades (stone accents and brick claddings) are clipped on, and the building is complete.

Recently, a few other companies have grabbed headlines for reviving the dream of omnipresent modular building. Unlike them, Skender is not a startup. As a legacy builder, it has long industry experience, and has staffed its factory with builders well-versed in its local market.

As well as economies of scale, proponents of modular architecture tout its freedom from weather-related delays, unpredictable site conditions, and fragmented supply chains. Those all stand to benefit Skender. No subcontractors will work in the factory, which will avoiding squabbles between HVAC or plumbing specialists who might blame each other when something goes wrong. But that also means Skender assumes all the risk. That has undone some past experiments in prefab and modular building.

At the factory’s opening, 25 people worked there, and Skender plans on hiring five more per week till it’s fully staffed at 150, all union labor. At this level, it’ll have the capacity to assemble 18,000 square feet of building at a time. That could put a dent in Chicago’s affordable housing needs, which are vast. The National Low-Income Housing Coalition (NLIHC) reports that the Chicago area alone is short 472,000 units of rental affordable housing.

Skender has purposefully sought out affordable-housing applications for its process; Swanson says his goal is to “bring the cost down and tie it into something that maintains it that way.” First up is a batch of 10 three-flats (or 30 total apartments) for the developer Sterling Bay. Together, they are targeting families making 60 percent of the area median income—too much to qualify for much subsidized housing, but too little to fare well on the open market.

In the Chicago region, 41 percent of renters making 51 to 80 percent of the AMI pay more than 30 percent of their income toward housing, according to the NLIHC. Nationwide, it’s 46 percent. But no amount of moderately priced housing can relive all the pressure on the poorest and least secure. “We would still find a significant shortage of hosing for what we would call extremely low-income renters,” says Andrew Aurand, vice president for research at the NLIHC.

Certainly, there are reasons there’s such a dearth of affordable housing beyond price and pace of construction (like zoning restrictions and NIMBY activism) that Skender can’t address alone. And the factors that Skender can address are getting tougher, with rising labor and material prices, Swanson says.

Sterling Bay is privately subsidizing the affordable units itself (it’s not using any tax credits or governmental subsidies), and it declined to respond to questions asking if it had sole control over rental rates, or if it could raise them at will. The developer is best known in Chicago for receiving $1 billion in public subsidies to build high-end housing (with a smattering of affordable units) in one of the city’s most affluent neighborhoods.

Exact sites for the 30 apartments haven’t been determined, but they’ll be placed on vacant lots in the city’s West and North-side 27th aldermanic ward, which spans some of Chicago’s lowest-income and most affluent neighborhoods. Placed in the gentrifying and Michelin-starred West Loop, these units could be market-rate luxury housing, earning Sterling Bay (which is also a minority investor in Skender’s modular business) a tidy return. Dropped in poorer East Garfield Park, they stand a chance of working as naturally occurring affordable housing, especially if Skender can keep shaving off time and labor expenses.

As gentrification continues apace in Chicago, with tasteful and modern modular three-flats filling in vacant lots, it’s easy to imagine the West Loop bleeding into East Garfield, increasing Sterling Bay’s desire to maximize its investment and raise rents. That would mean the value of Skender’s research and investment wouldn’t be flowing to the Chicagoans they’ve been designing for.

Swanson is careful to couch discussions of this new housing model in terms of working with communities and developing neighborhoods in ways and locations they feel comfortable with. He says he understands that the ripple effects of housing are about much more than design and fabrication. “A factory-built three-flat is the easy thing,” he says. “Now we have to figure out what it means to put a three-flat in a neighborhood.”

Zach Mortice is a Chicago-based design journalist who focuses on landscape architecture and architecture.