Efficiency And Value: Stack Modular’s Konstantin Daskalov Thinks 2025 Will Be Modular’s Year In LA

The Los Angeles multifamily market is projected to grow in 2025 given its “continued economic strength, demographic tailwinds and the lack of alternative housing options.” 

The market, however, is experiencing unprecedented setbacks. Questions have been raised on how to best rebuild after January’s destructive wildfires, expected to be among the costliest natural disasters in U.S. history. 

Konstantin Daskalov, vice president of U.S. operations at Stack Modular, a provider of structural steel modular buildings, and developer, said that utilizing steel modular structures is the solution developers need for an efficient and cost-effective way to build vertically and ease pressure on a shaken LA real estate market. 

“To meet the demands fueling the housing crisis, we can’t afford to only build single-family houses,” Daskalov said. “It’s too expensive and there’s not enough land, so we have to build vertically. With the recent fires, you’re going to see more steel modular buildings come onto the market, because it’s clear we can’t build in wood anymore. Steel modular provides the same stability, quality and fire-resistance of concrete at a lower cost and speed of execution.”

Daskalov will be speaking on the “Navigating The Future Of Housing And Getting Projects To Pencil” panel at this year’s Los Angeles Multifamily CRE Summit on Feb. 18. Click here to register.

Bisnow spoke with Daskalov to find out more about the current trends in Los Angeles’s multifamily sector, how Stack Modular is working to push the development market forward and what challenges the industry is facing.

Bisnow: How is Stack Modular working to propel the multifamily development market forward while creating value for its clients?

Daskalov: We approach every project by providing a complete solution to the developer. We guide design, define scope, provide pricing, coordinate with the general contractor and manufacture and execute in half the time of conventional on-site construction. We don't just bid a project and sell developers a certain amount of modular units at a certain price per square foot, which most people might assume. We are part of the entire process from design to installation, coordinating with all parties involved.

We provide a solution by working towards the developer’s target budget based on their financial pro forma to assure the project pencils. We do block massing and help design a building or work with a preexisting plan and then redesign for efficient modular execution, which is very different. 

Our preconstruction team works with the general contractor and subcontractors who have to provide the on-site work. In most cases, we have been able to help our clients come up with a project that gives them the same, or larger amount of units and rental square footage in a much more efficient building design.

From a price perspective, we're 25% to 30% more cost-efficient than conventional construction approaches, and we typically have a shorter schedule by 45% to 50%. We can stack and connect modules as fast as 10 to 14 mods per day, so we can erect a building very quickly. Our modules are completely finished and [California Department of Housing and Community Development] inspected and certified when they arrive on-site, with all units mechanical, electrical and plumbing systems already complete and stubbed out in the corridors. The contractor just connects everything and tests it. It's all there.

Bisnow: What trends are shaping LA’s development and construction scene in LA?

Daskalov: I think it's becoming very obvious to people, especially after the recent wildfires, that in LA we should be building with steel and not wood. If you look at the structures that are still standing after the fires, those structures are steel with concrete cores. A fire can still burn the exterior facade and damage things inside, but the reality of the matter is that the building’s integrity is still intact. 

At Stack Modular, we have a unique robust cold-formed steel, or CFS, structure, and we have a two-hour fire test certification, which is unique. I think we're learning very quickly in LA that we need to build the way Europe and Asia build. Our structures need to be solid, yet still pass earthquake requirements and withstand extreme weather.

Stack’s structures used to cost a little bit more than wood, although lately we’ve found out that we're very competitive with wood. On recent projects, we came in almost 30% cheaper than similar buildings priced in wood and light gauge steel, or LGS. Our advantage is that we manufacture in China, right next to the world’s supply chain at great labor rates.

Bisnow: Is LA's commercial real estate industry equipped to handle new and ongoing challenges in 2025?

Daskalov: Our biggest challenge is the affordability of housing in LA and the bureaucratic red-tape requirements. The approval process makes it almost impossible for a developer to pencil and make money on a project if they have to wait on entitlements for one to two years and another 12 to 14 months for permits. 

The city of LA and the government of California have to improve the way the entitlement and permitting process works. If they are able to expedite that process, then the private developers can now focus on the construction cost, which is the next big problem with on-site construction scope. 

Labor costs have also become extremely expensive in California because the older generation is retiring and the new generation doesn't want to work on a construction site. I also feel that another major challenge that's facing us will be how to rebuild in LA after these wildfires and do it efficiently.  

Bisnow: What will the development landscape in LA look like in the next several years?

Daskalov: We're going to see more modular buildings popping up. These will mostly be steel modular, especially for structures over 100 units, because to meet the housing crisis, we cannot afford to build only single-family homes. We have to go vertical, and to accomplish this, we need robust structures that can be built fast and less expensively than the typical conventional construction.

Bisnow: What do you think attendees will be most excited to hear about at this event?

Daskalov: I think most people are interested in finding out how we approach the process. Modular building is not something that you can just use the old way of thinking and accomplish successfully. Typically, a developer's idea hires an architect, the architect comes up with a set of plans and they go price it with a few contractors. Developers see that this doesn't work in today’s environment, and they start value engineering, or basically creating a worse building, to make it work. We need an integrated delivery method to build modular structures successfully.

This article was produced in collaboration between Studio B and Stack Modular. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.