Thursday, October 06, 2016

Forest City gives up on modular business. Gilmartin claims "bumps" typical of start-up.

So, reports the New York Times's Charles Bagli, Developer That ‘Cracked the Code’ on Modular Building Exits the Business. And while the article does point out the distance between Forest City Ratner's hubris and the results, the developer still does its best to spin.

(Given that the article appeared before a press release was issued, I assume it was placed as an exclusive.)

The lead:
Five years after announcing that it had “cracked the code” on modular building technology and would open a factory in Brooklyn to construct modules, the developer Forest City Ratner is getting out of the prefab construction business.
The firm said on Wednesday that it would sell its factory at the Brooklyn Navy Yard along with the associated technology to a former Forest City executive, Roger Krulak.
The decision came as the developer completed construction of the tallest prefabricated steel structure in the world, a 32-story tower at 461 Dean Street in the Pacific Park complex in Brooklyn, which is weeks away from receiving its first tenants.
Forest City made the 930 modules that were used to build the tower at the Navy Yard. It had originally planned to use the factory to create the building blocks that could be outfitted with wiring, plumbing, bathrooms and kitchens for each of the 15 buildings planned for Pacific Park, originally known as Atlantic Yards.
Let's note that Forest City is surely taking a big loss. Also that Forest City didn't make all the modules; the partnership of Forest City and Skanska made the first significant batch.

While Bagli writes that "the tower was plagued by delays and later a bitter dispute" with Skanska, that ignores a state monitor's report of leaks, mold, and the need to gut apartments, as I reported

Also missing is how Forest City promised less noise, fewer deliveries, and a faster construction schedule--all of which were supposed to add up to a decreased impact on neighbors, and are now dutifully being promised by the new Full Stack Modular.

Now conventional construction for the rest of the project does indeed disturb neighbors.

Endless spinning

“The bumps we hit, with respect to Skanska, are typical of any start-up,” Forest City CEO MaryAnne Gilmartin told the Times. “The good news is that we’ve worked out a lot of the bugs and gotten through the growing pains of innovation.” Except the lawsuits between Forest City and Skanska remain unresolved.

Except Gilmartin famously said last year that she was "a deep believer" in modular, and now she's not--or not enough to keep it in her company.

Gilmartin said nothing prevents Krulak from pitching Greenland Forest City when Full Stack Modular is up and running. But that's nothing close to a commitment.

What next?

The Times reports:
Mr. Krulak, who oversaw the work on the modular building for Forest City, and recently formed the company Full Stack Modular, said that he and Forest City had worked out the factory mishaps, technology kinks and disputes that turned what was supposed to be a quickly built tower into one of the longest-running construction projects in the city.
The building, he said, is proof that the technology works.
But the disputes haven't been worked out: lawsuits are still pending between Forest City and Skanska. Except we don't really know how the mold monitoring really went.

While Krulak said his new company is in talks regarding new buildings, it's unclear whether they will be high-rise buildings or, if they are high-rise, apartments. He told the Real Deal,“Hopefully, we’ll sign contracts with some hotel developers and some mid-rise projects in Brooklyn."

Hotels are easier than apartments because they don't include kitchens, and the units can be more uniform. Note that the press release, below, does not indicate they'll be building high-rise apartment buildings.

(Update: Krulak told Fast.Co Design Full Stack Modular has some contracts in the works for multi-family projects, but nothing as tall as 461 Dean: "Our sweet spot for modular in an urban environment is in the 10-to-18-story, 80,000-to-120,000-square-foot buildings."

He also told the Real Deal he plans to rehire much of the original workforce. But that's only if they're available. Note that the "groundbreaking collective bargaining agreement" that will be maintained pays workers far less than on-site workers.

Note that the press release below calls Krulak an "award-winning inventor," but the Breakthrough Award he got from Popular Mechanics was bestowed with notably poor timing, given that the modular building in Brooklyn had stalled.

Update: The press release issued at 7 am today
Full Stack Modular LLC Purchases Core Assets of FC Modular, LLC from Forest City Ratner Companies
Leading Member of FC Modular and Award-Winning Inventor of High-Rise Modular Technology Acquires Company's Core Assets, Launches Full Stack Modular
Full Stack Modular to Build on the Success of 461 Dean Street, The World's Tallest Modular Residential High Rise

BROOKLYN, N.Y., Oct. 6, 2016 /PRNewswire/ -- Full Stack Modular, LLC announced today that it has purchased the core assets of FC Modular from Forest City Ratner Companies (FCRC), a wholly owned subsidiary of Forest City Realty Trust, Inc., (NYSE: FCEA and FCEB). Full Stack Modular will offer turn-key modular solutions for developers of new multi-family buildings, hotels and dormitories and will continue to operate out of the 100,000+ square foot factory in the Brooklyn Navy Yard.
Full Stack Modular's CEO and founder, Roger Krulak, was formerly Senior Vice President of Modular Construction at FCRC where he was a leading member of the team that built the modular business that formed the foundation of FCRC's flagship project, 461 Dean Street, the tallest modular building in the world. 461 Dean is now leasing and will welcome its first tenants this fall to breathtaking views and amenities made possible by its modular construction.
The deal includes the long-term lease at the Brooklyn Navy Yard, all equipment and Intellectual Property, as well as the bespoke technology created for this manufacturing process. Full Stack Modular will also maintain the groundbreaking collective bargaining agreement with the Building and Construction Trades Council of New York and its members, and anticipates rehiring much of the original workforce responsible for 461 Dean Street.
"I am very proud to own a company that will continue to build upon our original mission at Forest City, and further grow the valuable relationships with the community, the unions and the talented workers who help bring our vision to life," said Krulak. "Modular is the future of multifamily construction and Full Stack Modular will be at the forefront of innovation in our industry. Our systems are not only more efficient and cost effective than conventional building, but also more sustainable and community-friendly."
"We have always been firm believers in modular construction and we are incredibly proud of the breakthroughs we've made that will soon be seen at 461 Dean Street," said MaryAnne Gilmartin, President and CEO of Forest City Ratner Companies. "The sale allows us to put our focus on our core strengths – management of our assets and our incredible pipeline of development. We are thrilled that the high-rise residential modular industry we launched will continue its groundbreaking innovations in the skilled hands of Roger Krulak at Full Stack Modular. We know it will be a great success."
"We're pleased that Full Stack Modular will remain at its home in the Brooklyn Navy Yard and will maintain the agreement to employ highly skilled, unionized workers," said Gary LaBarbera, president of the 100,000 member Building and Construction Trades Council of Greater New York. "It's also good to hear that the company plans to hire from the community and anticipates rehiring much of the original workforce responsible for the project at ‪461 Dean Street. We look forward to working together in partnership with Roger Krulak and Full Stack Modular."
An internationally recognized expert in modular construction and innovation, Roger Kulak was the recipient of the 2014 Popular Mechanics 'Breakthrough Award' for his work on the creation of the high-rise modular process, has been appointed to the Building Innovation Panel for the Country of Singapore and regularly speaks all over the world.
About Full Stack Modular
Full Stack Modular provides turn-key modular solutions for developers of new multi-family buildings, hotels and dormitories. Full Stack Modular is dedicated to the innovation and creation of environmentally-conscious, cost-effective and labor-friendly development of multi-family housing. The company is located in New York City, in the Brooklyn Navy Yard. For more information, please visit or email

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