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Sat. Jul 13th, 2024

Denver’s Largest Modular Housing Building Coming to Sun Valley

By meerna Jul11,2024
Denver’s Largest Modular Housing Building Coming to Sun Valley

In the shade of a tent, people watch as a modular unit, part of a 77-unit apartment building, is lifted into place by a crane at the West Holden Place construction site in Denver, July 10, 2024. (Photo by RJ Sangosti/The Denver Post)

On a sunny Wednesday morning, a loud horn sounds before a large crane lifts a 25-ton crate into the sky in Denver’s Sun Valley neighborhood. It then maneuvers it into position and, as gently as possible, places it on the third floor of what will soon be a six-story apartment building.

The box has windows, insulation, painted drywall, flooring, plumbing, electrical, pretty much everything you need. Even the appliances are pre-installed, including water heaters, toilets and kitchen sinks. Once the boxes are in place, the crew will hook up plumbing and utilities through the hallways, finishing them and finally the exterior.

People tour a modular building, part of a 77-unit apartment building that will be lifted into place by a crane at the West Holden Place construction site in Denver July 10, 2024. (Photo: RJ Sangosti/The Denver Post)
People tour a modular building, part of a 77-unit apartment building that will be lifted into place by a crane at the West Holden Place construction site in Denver July 10, 2024. (Photo: RJ Sangosti/The Denver Post)

“We hope to do a lot more of these types of projects,” Adam Berger of Adam Berger Development told the crowd gathered to see the units being rolled out at West Holden Place, a 77-unit mixed-income development.

Berger claims that using a modular approach is 20-25% cheaper than traditional methods and can reduce construction time by at least 40%.

These savings, combined with public housing funding from Denver, the Colorado Housing and Finance Authority and the Colorado Division of Housing, will be enough to make rent on most apartments affordable to renters making average incomes ranging from 80% to 120% of Denver’s median income.

Although social housing construction has historically focused on those earning the top 60 percent of income in the region, the problem has reached crisis levels even among middle-income earners, said Cris White, CEO of CHFA.

Market rents for one-bedroom units at West Holden Place are expected to start in the low $1,900s, with yet-to-be-determined affordable rents set to be lower for qualifying tenants. Presales are expected to begin next month.

In 2015, Berger began building modular townhomes, duplexes and triplexes, taking on increasingly larger projects. He describes West Holden Place as the largest modular apartment building in Denver to date and a test case to prove that modular techniques can work at scale while providing improved affordability.

Although most of West Holden Place will be completed within a week, Berger and his team spent three years designing and building the project, searching for a manufacturer after the first attempt failed and developing a financial model that balances affordability with market returns.

While faster and cheaper is an important goal, it is not the end goal. Berger wants to build apartments with a high standard of construction and the quality of finish needed to compete with new market units. He said his apartments are energy efficient, all-electric, in line with new requirements, and have significantly better sound insulation than the competition.

With a finished project and a set financing model, he hopes everything will be repeatable, allowing for future projects to be completed at lower costs and faster turnaround times, and for his teams to gain more experience.

Next up is a modular housing development in Englewood, near Swedish Medical Center and Craig Hospital, in an area that is quickly becoming denser. But the new units are largely out of reach for lower-wage health care workers, something Berger hopes to change.

Another project is in Olde Town Arvada, and negotiations are currently underway for two parcels in the River North neighborhood.

Modular multifamily buildings, including hotels and nursing homes, are a growing market segment that is losing popularity due to higher interest rates.

“We’ll be putting up 3,000 units this year, including 60 modules on this site,” said Matt Mitchell, owner of ProSet Setting Service in Telluride, the company that’s building the building.

ProSet is expected to average about nine modules per day with a crew of 18, but can do up to 15 per day. Denver, to avoid worsening rush-hour traffic, is limiting the time ProSet trucks can transport the large modules from its Centennial warehouse.

If the units were stored on nearby lots, as Berger tried, the core of the apartment building could be up in four days. That contrasts with the months of crews changing on a traditional construction site and potentially disturbing neighbors.

Jon Moon, head of business development for Nashua Builders in Boise, Idaho, said one reason timelines are compressed with modular solutions is that multiple activities can be performed simultaneously.

While Berger and his team laid the foundation and prepared the platform, Nashua workers assembled the modules in a controlled environment, allowing for better quality control and reduced waste.

“While they were pouring concrete, we were building the boxes,” Moon said. Each unit went through 30 work stations and took about 2.5 weeks to build.

Crews work to move the module, part of a 77-unit apartment building, onto the West Holden Place construction site in Denver, using a crane, July 10, 2024. (Photo: RJ Sangosti/The Denver Post)
Crews work to move the module, part of a 77-unit apartment building, onto the West Holden Place construction site in Denver, using a crane, July 10, 2024. (Photo: RJ Sangosti/The Denver Post)

Berger said he initially tried to source the modules locally, through IndieDwell, which opened a factory in Pueblo in 2020 to build steel frame boxes. But indieDwell ran into financial trouble, couldn’t honor contracts and now faces a state investigation into taxpayer fraud.

To avoid further delays, Berger turned to Nashua Builders, an established firm founded in 1961.

Colorado once had a respected and growing modular construction industry before the housing crash and Great Recession wiped out most of the players, including the company he founded, Mitchell said. He changed course and in 2014 began focusing on helping developers install modular homes.

About seven years ago, Mitchell said he only worked with a handful of module manufacturers. Now he has about two dozen manufacturers whose modules he installs across the West.

The key for Berger is to earn high enough profits to attract private investors, generate enough cash flow that his lender, in this case First Western Trust Bank, is confident of repaying the loan, and win support from the Colorado Housing and Finance Authority and the Colorado Division of Housing to cover the gap.

According to Berger, the key issue is getting costs down enough to make the financial model work, and this is where modular construction, with its greater efficiency, proves to be a game-changer.

Berger bypassed federal LITEC loans, which are limited in amount and fiercely contested. They also target affordability at 60 percent of the median income in the region. As rents and home prices have risen in Colorado, even households making typical incomes can’t afford what the market is offering.

By meerna

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