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Developers of Shipping Container Apartments Looking to Disrupt Real Estate Industry

 Brent Warren Developers of Shipping Container Apartments Looking to Disrupt Real Estate IndustryPhoto by Brent Warren.
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The developers of a 25-unit apartment building taking shape on Old Leonard Avenue think that they are onto something big, and a quick look at the project’s timeline shows why. After breaking ground in November, it took just five days to stack and weld 54 shipping containers together to form the basic shape of the three-story building. The first residents could move in to one of the 640 square-foot, two-bedroom units as soon as May.

“Time is money,” said Derrick Pryor, Principal of AES Development, “that’s one of the major benefits of this way of building.”

Pryor was brought on to lead the development side of the project by Michele Reynolds, CEO of Nothing into Something Real Estate (NISRE), a non-profit organization that provides a wide range of supportive services.

Reynolds saw shipping containers as a potentially cost-effective and environmentally-friendly way for the organization to make the leap into building its own housing. She also came up with a name – Cargominiums – that the organization has trademarked.

“We saw it as an opportunity,” said Reynolds. “These containers come one-way into the US and then they just stockpile in shipping yards..so this is a way to reuse them, but it’s also a way to solve a problem. There’s an affordable housing crisis here – not just in Columbus but nationwide – so what better purpose but to take it and build housing that can solve a social problem?”

cargominium-09

The Cargominum building will be mixed-income by design, explained Pryor; “so someone who is transitioning and needs supportive, wrap-around services, could be living right next door to someone who is just downsizing. That way you don’t quarantine or heard poverty, you allow a cross-cultural experience to be had between people who might, in traditional housing, have these disparate expeiences and may never cross paths…it benefits everyone.”

“And we think that that, coupled with the building material, is disruptive,” added Pryor. “It is an innovation that breaks the norm in a particular industry, in this case the real estate industry.”

If it sounds like Pryor and NISRE have plans beyond the 25 units currently under construction, that’s because they do.

“We are building this model because we want to scale it,” said Reynolds, adding that a number of local and regional developers have inquired about the project, and that the building technique they are developing – in collaboration with general contractor Barry Cummings, of Chelsi Technologies – could be applied to anything from student housing to hotel construction.

A second phase of the Cargominiums project is also on the table. Reynolds said it would likely offer a for-sale product, although exactly where it would be built has not been determined.

For now, the team is staying busy with Phase One, fielding daily calls and emails from people interested in living there. Pryor said that the location – on one side is a small residential neighborhood that has not seen much investment in recent years, on the other a jumble of warehouses and light-industrial users – offers plenty of upside.

“This is a community that has really embraced this project, in part because there has not been a lot of attention paid to it, but this is also a community that has some incredible assets,” he said, like a downtown view and quick access to I-670 and East Fifth Avenue.

cargominium-08

“We didn’t get push-back from the neighborhood,” said Reynolds. “Anywhere else in Columbus, we may have have had a lot of opposition, but here, we got embraced.”

Although not the first shipping container building by any stretch, most of the completed projects have been clustered on the coasts. Pryor and Reynolds also think that the Cargominium building will be one of the largest structures of its kind, and the first to feature covered parking underneath underneath elevated containers (six spots will be covered, with additional parking in a surface lot).

Building with shipping containers is not without its challenges – many meetings with the city were required to ensure that the building would comply with building codes, which were written with traditional construction methods in mind.

The financing has also been untraditional, with capital from a mix of private and quasi-public lenders (including IFF, the Finance Fund and the Affordable Housing Trust for Columbus and Franklin County), but no Low Income Housing Tax Credits, the most common way that affordable housing gets built in Columbus.

“We think the financing is another thing that’s unique about the project,” said Pryor, “it makes it more affordable and more sustainable.”

For more information on the Cargominium apartments and the group’s other projects, see www.nisreinc.org.

All photos by Brent Warren.

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  • jman

    Glad to see this.

  • failureofleadership

    Cargo containers are cheaper to buy used than the cost of new steel input to build from scratch. This is the result of the one way trade in our consumer economy. When we run out NO one will build them for housing. This is a fantasy that does nothing to help with the severe housing unit shortage. US army has loads of data from using units as housing. The thermal conductivity of a steel box is about as bad as one can get for energy efficiency.

  • failureofleadership

    These also possibly turn into insane mold generators due to the sealed nature of steel units. Modern building requires the building to breathe. Hence the damage done in the past from using plastic as barrier rather than a porous breathable vapor barrier like tyvek.

    What isolation is there for sound and non-heated units?

    What data is there on operating costs for heating and cooling. Are these units going to be more or less costly to operate than a multi unit build utilizing current building methods?

    The novelty does nothing to lower the per unit cost of sewer tap, electric tap, water tap, gas service and zoning costs.

    Was any TCLIP testing done on floor scrapings of containers used? Many many units are gross and have the potential to contain residue of freight spills and outgasing of recently completed products sealed air tight for months on a boat?

    • MDWST

      This has been going on in big cities across the US for years. I’m sure if you took a trip over to google dot com you could find any and all answers you require.

      It’s not exactly someone living inside of an enclosed storage shed with a straw bed to lay on in the corner. It’s a 300 square foot insulated apartment with floor to ceiling windows, doors, and central air – like most other buildings. It’s just a tiny house with framing already in place.

      • failureofleadership

        Google would be a good starting point for you.

    • John Costello

      are you possibly in the building business? hoping this project will fail?

      • failureofleadership

        Why would a builder care if this fails. I hope no one takes a bath on it. I have experience with container mods, usage and residential insulation. Most importantly it drives me crazy that anyone thinks a finite supply of steel boxes that are priced below cost are a fix to the real shortage of housing units. Have a nice day.

        • MDWST

          Sorry to hear about your failures. Just recently stayed in one of these developments in NYC. It was quite lovely. Amazing to see what someone skilled in container mods and residential insulation can do.

          • failureofleadership

            thanks for calling me a failure. I’ll be enjoying yet another day of early retirement today. What are you doing…. brewing coffee for a customer? You obviously have crushed me with your extensive technical knowledge and experience. have a nice day expert.

          • failureofleadership

            Your counter arguments
            1. Your a failure
            2. I went to a bigger city and slept in one.
            3. More than one person is doing this

          • clambake

            I don’t believe you are sorry. I do believe that you wanted to use the term “failure”. The OP is correct. This is not a serious answer to the problem of affordable housing. This is not a problem that is going to be solved by “innovative design”.
            The fact that you stayed in a nice shipping container building in NYC really tells us nothing about its viability as a solution to the problem of the shortage of affordable housing.

          • failureofleadership

            I can’t let this go. There are roughly 400 units I had the privilege of working on all over the world. Not housing but refrigerated units and industrial machinery. The successful completion of these projects is why I’m not punching a clock today. Though there were much smarter and technically adept people and vendors involved I learned a ton.

          • failureofleadership

            It’s a fetish

  • bcoffey

    I just want to say thank you for helping the affordable housing community which is in desperate need of solutions. Everyone on this thread should wish this program well. Its time for solutions for housing for our workforce. The time for rhetoric is over. I say bravo for jumpin in!!

  • Stephen Francis

    I really fail to see the level of opposition and the oddly personal tone this has taken. The fact is there is no ONE way to solve a housing shortage or affordability. The developers seem to recognize that it’s not “the” solution but rather “a” solution. This is an emerging element that may have pockets of success based on demand and availability of suitable container units. Not all units are suitable for some of the reasons stated and the supply is not infinite, however, it is plenty at this time. There are advantages and disadvantages to any type of construction or solution but it seems many of the concerns can be mitigated and addressed with moderate success. In the context of our current situation, I believe that innovation should be encouraged. If in ten years we look back and discover that it was not as successful as we had hoped, so be it. I hope to see a few more of these around town.

    • failureofleadership

      OK lets leave the technical questions aside. No one understands them.
      1. Is the finished cost per sq ft higher or lower than conventional building methods?
      2. This project could not receive traditional tax credits grants or finance because why. Is it because of lack of data about viability? Or is it just old timers set in their way?

      • Stephen Francis

        It’s not that we don’t understand them, it’s that there are ways to address those concerns to make it so these types of building would address thermodynamics, sound, chemical contamination, material toxicity, and so on. That’s where there is room for 3rd parties to be the sources of the containers. They screen for appropriateness and preparation before getting to the site. There are companies that prep containers to remove the harmful environmental hazards (at a higher cost) that can come with these containers and other only sell those without the contaminants. There are certainly containers that will never be fit for residential use. I would hope they could not be used with harmful chemicals and metals under current EPA guidelines. If not, there is room for regulations to assist in making sure environmental hazards to residents are prevented if they are not there already.

        The cost is anywhere from a third to less than half the construction costs of a traditional build from what I’ve read. Of course, that’s also dependent on the size of the project, finishes, etc. The bigger the project, the more you save in time to build the structure from what I understand. In this particular case, according to the Dispatch article on this same building, this developer is reporting the project will be about 30% less expensive to build than a traditional building of the same size. The construction time is also significantly reduced. That is where a significant saving comes in when using shipping containers for a larger build like this. To build the structure out of traditional materials as we see in the photos above would have taken weeks, possibly months to get this far rather than 5 days. That’s part of one of the benefits to builds like this to address a housing shortage is that more units can come online much more quickly.

        I don’t know that it couldn’t. The article doesn’t make it 100% clear. It almost seems as though they just sought out different funding sources which may be quicker than the bureaucracy of tax credits. When the costs are lower, a developer may be able to attract smaller investors. Perhaps it was because they wanted to set their own requirements for residency? It may be because of lack of data which could make this project more important in the future success or failure of more projects like this. Those are all suppositions though. It is a curious question I’d like to see more information on the reasoning.

        The Dispatch touches on some additional elements like wind resistance as well.

        http://www.dispatch.com/news/20170219/apartment-building-made-of-shipping-containers-first-for-columbus

        • failureofleadership

          I would wait until occupancy permit issued to count the build costs. At the end of the day this does nothing to address housing shortage. It’s a diversion created by trade imbalances that make it more cost effective to dump empty containers here rather than back to origin empty. If containers become sought after, which is happening for appropriate industrial uses it’s all pointless. You can not fabricate comparably priced steel units. So go for it build them. Just cut the bs that this is going to transform housing.

          • Stephen Francis

            This does do something to address the housing shortage. It brings 25 more residences to a neighborhood. The efficacy or efficiency can be argued but there will now be more units. As for data from around the world, the consensus is out there that it is cheaper. Now, pulling a comparative spreadsheet project by project is a bit harder to find. The pitfalls come in things we previously mentioned as well as general design and architectural flaws etc. I don’t believe it’s a coordinated distraction to distract from trade imbalance. In fact, many articles mention how the trade imbalance make them so readily available and less expensive than they once were. Will it be “transformative,” probably not. But helpful, most likely.

          • failureofleadership

            Tent cities, shed conversions, garage conversions and vans down by the river are also helpful on the micro level.

          • Stephen Francis

            What would you like to see to help on the macro level then? If this isn’t the answer, what are the better options you envision?

          • failureofleadership

            The things making it impossible to build affordable housing without grants etc are.
            Zoning costs
            Zoning limitations on density
            Sewer tap fees
            Water hook up fees
            Permitting fees
            Land controls.
            All of these are more or less controlled at the local or state level. So the cities with the worst housing affordability are almost exclusively democratic controlled. Hence my term fake progressives. Poor people suffer the effects of these policies while everyone cheers great new restaurants and places for grown children with degrees to play games and fit club. I have buildable land and have been shocked by what it costs to build. Better off buying abandoned houses that have exsisting sewers and utility records

          • Stephen Francis

            Much like the solution in terms of construction techniques, a reduction of soft costs could certainly help that. But soft costs like the ones you mention account for roughly a quarter of a construction project, no? And of that, the architecture and engineering plans are a significant chunk of that making the bureaucratic costs of the “administrative state” less than that. I don’t disagree that there could probably be some zoning and administrative costs that could be reduced but that’s not going to change the fact that 70+ percent of a project is hard costs. Tackling the soft costs while clinging to traditional construction techniques isn’t going to address a growing affordability issue.

          • failureofleadership

            Have you priced a sewer tap for multi family?

          • Stephen Francis

            I have not, but I also just agreed that there are probably areas where expenditures from the government side can be reduced. The concern is you will always have to balance that with how far can you go before you compromise being able to maintain the infrastructure of a sewage system with increased demand and increased aging. If we reduce the burden on the landlords to make the rents more affordable, where is the money made up to keep up the system? Lots of gray, and it’s not just the water.

          • Stephen Francis

            It’s been a fun conversation but at this point we are getting into minutia better discussed over beers. Cheers, friend!

          • failureofleadership

            Yep. I will leave you with this. A solution could be modular factory built units to be assembled on site. These exsisting containers are heavy and there is a lot of rework on heavy gauge steel. At the end of the day I think it’s guaranteed that our government is not going to deal with this crisis until it boils over. Just like always. Have a nice day. And thanks for not pointing out my weak grammar

          • failureofleadership

            Clinging to traditional methods of building? Vice using heavy gauge steel boxes that are better off melted down to recycle.

          • failureofleadership
          • failureofleadership

            My God! Look at the graph in this article. All the money flows to the top. First step to fixing this is accepting that both political parties keep this going on. Ask more of our politicians.

          • Stephen Francis

            I will agree about asking more of our politicians. I would agree that we should stop funneling so much of our tax credits and rewards to the high income projects and earners. I have been a regular poster advocating that the city and county stop handing the bank to high end homes and complexes and dragging their feet and holding back the purse in poor neighborhoods. I am vehemently opposed to the Easton tax deal that saves the developer over $60 million in exchange for a single $4million donation to a low income neighborhood. I have advocated for the local entities to be giving the biggest tax breaks for affordable units. I have talked about zoning to require certain affordability and much more on here. I get that. I get the graph. But the graph doesn’t seem to correlate with the proposal. The proposal is not shifting the federal expenditure. It simply takes the current expenditure and says that is a developer builds low income housing, they will now get a tax credit to help fill the gap between what a fixed rent and market rate would be. The graph could very well end up looking the same if the government entities continue to choose what projects get credits based on current patterns. It’s not clear that it would be enough to sway developers who can still build high end units with a larger profit margin. If it doesn’t sway the development, then it’s not that effective. I don’t oppose the idea, but I still contend tax credits, soft costs, hard costs, and infrastructure must all be leveraged together.

          • Stephen Francis

            I not sure how this inherently addresses the issue other than by providing landlords with more tax dollars? This doesn’t seem that it would have an effect on helping to fill the housing shortage gap or ensuring it’s affordable by driving down the costs to build and be profitable at the same time as keeping it reasonable for the renter.

          • failureofleadership

            Did you read the article? It mentions developement.

        • failureofleadership

          I would also like to see real data per sq ft from around the world.

  • failureofleadership

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