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Modular housing is coming to the Sea to Sky—and it's here to stay

Inside the seismic shift in residential construction

It's a bluebird day in March, and I'm standing alongside a crew of workers from Whistler builder RDC Fine Homes. Along with a handful of other people, they've been waiting patiently for this moment all morning.

The crane operator fires up his engine, and the giant, rectangular steel-framed structure—known as a module—slowly hovers off the ground.

A ground crew uses long blue ropes to help steady it. Then, when it's high up in the air, the operator begins to move the module laterally, towards a pre-built concrete foundation.

Located in Black Tusk, a gated community 15 minutes south of Whistler, the lot is surrounded by trees, and the operator has a difficult time skirting past two tall ones.

At one point, the module—which is essentially a fully-finished modern home, complete with washer, dryer, and modern kitchen already in place—hits the top of one of the trees, bending it over.

"You're going to need a plumber!" someone shouts from the crowd.

It doesn't look so bad (there's no need for a plumber, it turns out) so the module continues its journey. When it gets close to the foundation, the team uses long blue poles to ensure it sits flush.

Later, the team, which works for Horizon North Logistics, a Calgary-based company that built the home at its factory in Kamloops, will drop another module, forming an L-shaped floor plan.

With the plumbing and electrical already in place, the home will then be hooked up to the water and sewer system. From there, a team from RDC will take over, installing the roof and carrying out the finishing touches. Within 45 days, the owner will be given the keys.

Having recently signed a partnership agreement with Horizon North, RDC's president, Bob Deeks, is adamant that what I just witnessed—the "landing" of a modular home—will soon be commonplace in the Sea to Sky.

Deeks, whose custom-home building company has amassed a litany of awards, told me he's confident that, within five years, half his projects will be modular builds.

The transition we're seeing in construction is akin to the transportation revolution of the past century, he believes. When society shifted from horse-drawn carriages to automobiles, an abundance of vehicle manufacturers emerged, but within 20 years, that had dropped to just a couple dozen. By the 1970s, you were down to a handful of car companies—the Big Four—in North America. Similarly large companies like Horizon North will have access to immense economies of scale, says Deeks. "As they build more housing and they expand, they will bring those economies of scale to the table."

To me, it begged the question: is this the future of residential construction? And what does that mean for home-building as we know it?

A happy homeowner

After the first module is dropped, I hang around the site for a while, talking to some of the workers.

Soon, I meet the home's owner, Vince Kehoe, a charismatic guy wearing clean brown sneakers, sunglasses and white pants, who strikes me as the early-adopter type.

"A lot of people know me as Vince the invention guy," he tells me. "I've been developing inventions for 26 years."

He's been living in Whistler for a decade or so, and he tells me that he practically built his business, helping inventors develop their ideas and sell them to major manufacturers, from the chairlift. Clients would call him, and he'd talked to them while he was snowboarding. "I'd be like, 'Oh, I'm just out in the field here with a client—sorry it's a bit windy!'"

Kehoe has been involved in an impressive array of innovations, and he's betting that his most recent acquisition, the modular home taking shape in front of our eyes, will pay off down the road.

For him, modular construction provides a way to build quickly and guard against construction delays.

He loves the house, but is "not necessarily married to it," he explains. He may sell if the right opportunity comes along, he adds.

Kehoe purchased the lot around a year and a half ago, and decided to go modular after a friend suggested it as a sound option. After some research, he landed on Karoleena, a high-end modular homebuilder known for its sleek, modern designs; Horizon North acquired Karoleena in May 2016.

After browsing through around a dozen models, he eventually landed on his floor plan, the Kensington, and then got started on the modifications.

He ripped out a wall that separated the bedroom and bathroom and placed a freestanding bathtub at the foot of his bed.

"You guys are going to want to come over," he tells a group of guys were standing with. "It's just great!"

The house seems nice—really nice—and was comparable in price to a custom-built home constructed onsite. "I would say at the end of the day it was about the same," he says.

Going modular did, however, give him added cost certainty. "If I wanted to add a fireplace, I knew at the end of the day it was $3,000 or $4,000 more," he says. "It was very laid out and catalogue-ish."

Deeks, Kehoe, and the elated RDC workers who watched the module "land" aren't the only ones excited about modular housing coming to the corridor.

Whistler real-estate agent and entrepreneur Ken Achenbach was on-hand as well.

Achenbach had spent the morning documenting the landing on his GoPro cameras, collecting footage he'll use to give clients a clear idea of the merits of modular construction.

"These houses are why I got into selling real-estate—straight up," he tells me.

"There's a great market for big, custom-built houses, but for regular people, this is the future in the Sea to Sky," he says.

Like others I spoke to, Achenbach feels modular construction offers two principal benefits: It allows people to get into their homes much quicker, and produces better quality homes. Rather than being framed outside in the rain, modular homes are prefabricated in factories, under close supervision.

Factory building is "straight up the future," said Achenbach. "There's nothing better!"

A way to get people housed quickly

While modular housing remains a relatively small segment of the high-end market, it is already gaining significant ground. Some feel it also offers an efficient way to get vulnerable populations housed quickly.

In a phone interview, Vancouver Affordable Housing Agency (VAHA) CEO Luke Harrison explains the role modular homes are playing in addressing Vancouver's housing crisis.

In 2016, housing was on the way for the city's homeless population, in the form of required social housing suites in new, high-density buildings, he explains.

But it would be years before the buildings were finished, and all the while the lots the buildings would sit on would remain vacant.

"When you have a severe situation with homelessness, you can't say, 'We've got a home coming for you—it's going to be here in two years,'" says Harrison.

"People can actually die in that amount of time living on the street."

VAHA weighed the options and eventually landed on non-permanent modular housing as a feasible solution.

The agency commissioned Horizon North to build a 40-unit temporary, modular housing complex at Main and Terminal to be built on "underutlized" city-owned land with a mix of government and privately-donated money. The micro-apartments measure 36 by 250-square-feet (three by 23 square metres), and can easily be dismantled, transported and then reassembled.

"We knew we had enough social housing in the pipeline, we just couldn't do it fast enough. This allowed us to have a bit of a stopgap where we could have people off the street, housed, and not going back to the streets," Harrison says.

The idea, explained Harrison, is to place the housing units on vacant land while the property awaits development, creating space for people to live immidiately.

That first complex was a trial, and Harrison said he and his team were blown away at how well it worked out.

The trial, he says, was followed closely by the NDP, and in the provincial government's first budget, it set aside $291 million to support the construction of 2,000 permanent and temporary modular housing units around the province.

Six-hundred units have been designated for Vancouver. The modular units will be staffed 24-7 by non-profit housing providers and will include support services to assist people in need stabilize and rebuild their lives.

So far, VAHA has over 150 modular units around Vancouver that are occupied, with an aim of having all 600 in operation by the end of the year.

"The first and foremost thing in the road to recovery is getting your own home," says Harrison, adding that it's much easier to supply "some of the wrap-around services" when people have a safe and secure place to live.

Harrison contends that modular housing also offers cost advantages, especially given the cost of development in Vancouver, where sky-high rents and a glut of work has driven up the price of labour.

"The knock on modular was always that there was a cost premium," says Harrison.

But "I think what we're seeing now is that the shortage of labour is pushing general site-build construction to a place where modular is being recognized as cost-saving (compared to) more traditional forms of construction."

The cost of a building professional in Kamloops (where Horizon North operates out of) is "dramatically less" than the cost of a building professional in downtown Vancouver, says Harrison.

A recent Altus Group study noted that Vancouver has the highest building costs in Canada for both the residential and commercial markets.

"We're seeing construction costs on a site-built, wood frame project reaching between $250 and $300 a foot (in Vancouver). To get an all-in solution at just under $200 a foot is incredible."

With that in mind, Harrison believes that modular housing is "really something that Whistler could benefit from."

Because the units are built elsewhere, it cuts down on "very expensive labour costs."

"Our belief is that the quality of these buildings can last just as long as site-built (buildings)," says Harrison.

"We have just done them in a form that is rapidly deployed and assembled ... so we can get that permanent construction done," he explained.

Marla Zucht, general manager of the Whistler Housing Authority (WHA), said that the cost of construction at the WHA's newly constructed Cloudburst apartment building was $330 per square foot.

Zucht said that while the WHA has not put out a request for proposal to Horizon North, it has had discussions in the past with Britco, another major, B.C.-based modular builder that supplied housing for the Athletes' Village during the 2010 Olympic Games.

"We will be considering different housing forms in the future to see if they are cost-effective solutions," said Zucht over email. "Modular may be part of that consideration as will other housing forms and construction methods."

WHA, she points out, already uses "a form of modular housing" in its new WHA Passive House Employee Rental Apartment at 1020 Legacy Way.

"BC Passive House is in the process of pre-fabricating the entire wall assembly for the apartment building, including putting the windows in, off-site at their factory in Pemberton in a protected indoor environment," said Zucht.

"Constructing the wall assembly modules in an indoor controlled environment will benefit from zero weather impact on the wood framed components of the building, higher performance tolerances, a decreased amount of construction waste and faster project construction completion, all of which will result in cost savings to the project," she said.

A factory visit

Kehoe visited Horizon North's Kamloops factory as his home was being built. It was unlike any construction site he'd ever seen—a "sterile and clean"environment that sits on "acres and acres of land," he says.

"It's like walking into a major corporation," he tells me.

The factory sits on a massive plot of land that once served as exhibition grounds for tradeshows and fairs.

There's an impressive office with a large boardroom (a modular build, of course), and a few examples of housing options that Horizon North offers, which you can tour around.

The actual modules are constructed in a large building that looks a bit like a shipyard from the outside.

The floor of the module is built on casters in one corner of the building. And as it works its way around the building, the structure takes shape. Walls are built in a different facility altogether, and workers use a sophisticated pulley system to help fasten them in place.

A station sits next to where the electricians work, equipped with the precise number of wires, transformers, and outlets needed for a given module. Wood is pre-cut to precise specifications in an in-house mill. Everything is streamlined for maximum efficiency.

Safety standards are also extremely high, a carryover from the company's origins in the oil and gas industry.

Formed in 2006 with the merger of two publicly-traded companies, Horizon North had revenues of around a half a billion dollars at its peak, largely supplying modular housing for oil and gas projects.

Such camps can house up to 3,000 people, and Horizon North even has a catering division dedicated to them.

But when oil prices began to drop around 2013, Horizon North was forced to diversify.

"We very quickly looked around and said, 'Okay, we don't believe we're going to be building a lot of large camp products anytime soon,'" explains the company's CFO, Scott Matson, in a phone interview.

Under the guidance of a new CEO, Horizon North began pursuing opportunities in residential and affordable housing. Matson sees major opportunities for growth, particularly in the residential and commerical markets.

"We do a small amount of very custom, very high-end homes," explains Matson. "It's a bit of a product demonstration for the rest of our world, if you will."

"It's the commercial side, and the affordable housing side, where we see the largest portion of the market."

The company even builds hotels using modular technology, stacking one rectangular box atop another. The quick turnaround time is a huge selling point for the company.

A typical construction window for a hotel is a couple years, says Matson.

"I can build you the same thing in six months—quicker, cleaner, for relatively the same price—and you can be up and running, gaining revenue in six months, rather than two years."

How much modular will disrupt the housing industry is yet to be seen, but Matson sees major changes afoot. Across the U.S., around a third of all housing is factory-built, whereas in Canada, the rate is around five per cent, he says.

"So even if it's a doubling of that market share, I think it's a tremendous opportunity for disruption," Matson adds.

The impact on the custom homebuilding market

The rise of modular construction will inevitably lead to more factory-building jobs, begging the question: Do workers fear it will lead to major consolidation, displacing skilled-trade workers?

David Girard, president of custom homebuilder Peak Ventures, isn't worried.

"Oh God, no—no. That ain't going to happen," he says with a laugh. "There is always going to be that demand for a super-high custom product from a niche clientele."

There are still significant advantages to custom-built homes, Girard explains.

"Obviously, you have more flexibility in achieving design goals," he says. "I think the modular homes, although they've come along way over the years, they don't have quite the flexibility you do doing a custom home."

On top of that, there's the trade shortage.

"You look at the demographics of how many skilled trades people we need right now—there's like a 30,000-(worker) shortfall right now—and that isn't going away anytime soon," he notes.

The skilled trade shortage that Girard and other Whistler builders are feeling isn't consigned to the Sea to Sky.

A recent survey from the Independent Contractor and Business Association of B.C. reported that 75 per cent of construction companies cannot find enough qualified workers, up from 60 per cent the previous year.

Girard said that while Peak Ventures has yet to build a modular home, he's not opposed to it, and the company is already using pre-fabricated materials, such as structual insulated panel systems and BC Passive House panels, that are factory-built.

The materials—which can be used for various applications—help offload some of the labour requirements onsite.

Given the way the labour market is taking shape, Girard also thinks that modular construction is poised for major growth.

"I think that modular homes are going to become more and more in need, because it's going to help reduce the onsite human resources requirement of a project," he says.

Back at the house

In July, I visited Kehoe in the home I watched take shape. From the outside, it's quite austere, painted grey with two small rectangular windows. But, when you go inside, the home is filled with light, lined with massive double-pane windows.

The kitchen is sleek, with a large island, modern steel appliances, and a gas stove. A column, with a built-in electric fireplace visible from both sides, separates the family area from the kitchen.

The quality of the home, Kehoe says, has impressed him. "Everything they did was the best and the nicest you could get, without getting carried away," he says.

As for going modular, it gave him plenty of room to customize and he was happy to spare his new neighbours "15 months of hammers and nails."

"A lot of people that I talk to say that modular housing is the way everything is going to go," he says. "You have so much control over the building of it, and you can make any kind of house."

Is he still thinking he might flip the house after a short stint?

"I'll stay here," he tells me. "My thinking was more along the lines that if I had to sell it, I would be OK selling it, and that was an option. Now I've realized, you've got to live somewhere, and I love it here."

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