Modular Apartment Construction Gains Momentum In Bay Area
Renters in the Bay Area are in the midst of a fresh wave of rent increases as the city’s post-pandemic rebound accelerates.
As city leaders try new strategies to ease the building process, developers are increasingly employing modular construction strategies to speed projects and control costs, and they are looking for ways to expand the process.
“We are coming in 60% less with a 50% faster timeline,” said Danny Haber, co-founder and CEO of oWow Development, which is underway on an 11-story apartment project in Oakland. “As an entrepreneur, this reduction in cost is just scratching the surface of what we can do, and that is the exciting part. We are fully changing the game, and this is just the start.”
Haber’s company is using in-house prefabrication products and techniques on its $90M property at 1523 Harrison St., its second affordable housing project in the city. OWow uses mass timber flooring and prefabricated facade panels and steel bracing. In some instances, the windows are already installed in the prefab walls when they arrive at the project site.
OWow’s approach to construction is akin to assembling a Lego set that relies heavily on prefabricated modular construction components. Instead of site-cast concrete flooring, the company uses different sizes of mass timber plywood panels.
Once flooring is laid, different sizes of fully finished prefab exterior panels are flown in by crane and set in place. On large projects, the use of prefabricated exterior wall panels can save between $3M and $5M, Haber said.
“If we can prove we can build for $340 a hard-cost per foot and we are successful, then we have revolutionized how people are designing and building buildings,” Haber said.
All told, oWow can build for as much as 60% less than traditional construction methods, according to Haber. This cuts down on the amount of gap financing the company needs to obtain from government sources.
“Gap financing is very important to make affordable housing work, but it’s also very difficult to get due to the tight budgets that are in today's environment,” Haber said.
Average apartment rents in Oakland reached $2,110 per month in May, according to Apartments.com, up 1.3% year-over-year. The Bay Area is among the regions still experiencing rent increases as a wave of new deliveries in the Sun Belt flattens the nationwide rental rate growth.
The project is the latest in a spate of Bay Area modular developments. In October, a 235-unit project called Prescott Station opened in West Oakland, and EAH Housing broke ground on a 90-unit project in Los Altos in August.
OWow also completed a 186K SF, 236-unit building adjacent to the Harrison Street project in 2023 using modular construction.
Although the foundation for 1523 Harrison St. is just coming out of the ground, Haber said oWow is already casting its eye on other projects and will take lessons learned from both Oakland high-rise projects to advance additional innovation in prefabricated high-rise construction.
The company’s next project is a 15-story affordable housing project at 960 Howard St. in San Francisco, slated to cost about $90M.
“We are going to do this model not in just the Bay Area but throughout California and then other markets as well,” Haber said. “We're looking to create a national solution to solve affordable housing.”
