Sunday, October 04, 2015

From the Real Deal: pros/cons of local vs. imported modular construction, plus doubts about whether Forest City can "export"

The September issue of The Real Deal has a very interesting article headlined Modular imports edge into nascent Brooklyn industry, explaining how seemingly successful modular construction operations in Brooklyn--for projects in Manhattan, for Atlantic Yards B2, and more--coexist with a plan to build pods in Poland for a high-end hotel in Williamsburg.

"Attitudes across the industry run the gamut from apprehension to outright disbelief," writes Tess Hoffman, pointing to concerns regarding oversight "of design and city building standards."
At the same time, efforts at local production raise questions:
Richard Lambeck, chair of the construction management program at NYU Schack Institute of Real Estate, said that while he is optimistic about the situation [a lower wage rate] Forest City has worked out with unions, “That’s not to say that people won’t be very creative and say ‘let’s go to China,’ like we have for curtain walls and steel and everything else,” he said. “People feel like they can build it cheaper in China.”
Exporting Forest City's modules?

While Forest City Ratner's MaryAnne Gilmartin has said her company hopes to export modules from FC Modular’s plant at the Brooklyn Navy Yard, Hoffman writes:
Some peers find the concept mind-boggling.
Monadnock’s [Tobias] Oriwol said the benefits of using a producer in the city are local knowledge and decreased transportation costs, but the product cost is undeniably higher.
“It’s not that Capsys is expensive, it’s just that New York is expensive,” he said. “So I don’t think the export market from here is that viable.”
[Craig] Rosenman agreed, saying that when Daten Group compared the cost of buying from New York City to buying from other Northeastern manufacturers, it determined that time was the only thing saved.
Of a potential New York City-based export industry, Rosenman said, “They have to pay New York City labor rates even for their factory workers. So I don’t truly understand how that model makes sense.”
That said, it depends on what they mean by "export." It could simply "export to the New York area," so as to take advantage of proximity.

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