We started Apt in pursuit of standardizing housing development to reduce its costs and risks, as well as to increase quality and productivity. The idea was simple: the more repeatable, cheaper, and predictable the development process , the more ground-up projects may pencil, which would create more much-needed housing. Here are some of our main findings:
Standard development is a viable niche
Illustration of change in eligible parcels based on filtration conditions. Apt Buildings.
Our research process illustrated that standard building products can be developed on thousands of lots in the City of Los Angeles, making this approach conceptually viable.
However, the conversion funnel shows that only 26% of all underutilized parcels would qualify for standard buildings (8% for the 6-unit building typology). Traditional development still makes sense in the majority of cases where standard products may not fit in, or where they may underperform.
A need for multiple building products and a flexible kit-of-parts
When we conducted a similar study in Philadelphia, PA, we found a far more dispersed distribution of parcel dimensions, likely due to more historic subdivisions. It required us to create not one, but three different designs for the same building category (a small, medium, and large duplex).
A fixed-standard building approach may not be replicable in some markets. Instead, it would require a more flexible parametric software that could apply standard architectural templates to specific site conditions, along with a more flexible building kit of parts. In other words, this approach depends on achieving a healthy balance between the extremes of traditional bespoke construction and rigid standardization.
A new wave of construction startups like Juno, Intelligent City, and Modulous has recognized that too. Such startups are developing parametric architectural software and flexible kits-of-parts allowing for a higher degree of building customization from the outset. We believe in the same future, but we decided to start by focusing on software and standard buildings because it’s a less capital-intensive way to enter the market.
Non-uniform regulations are a major constraint
Various overlays and inconsistent regulations drastically limit the potential of standardized development. In the City of Los Angeles alone, they have removed over half of the otherwise eligible, underutilized parcels from consideration.
The worst part is that the Greater Los Angeles metropolitan area neighboring jurisdictions (West Hollywood, Santa Monica, Culver City, Beverly Hills etc.) all have their own unique zoning and planning regulations, despite having comparable subdivisions, nearly identical demand, and similar climate conditions. Not only does this restrict the potential of standardized buildings, but it complicates housing development altogether.
Parking minimums are a burden on new development
One of the toughest challenges for us, like many other developers and architects we know, is finding a way to accommodate parking minimums and regulations. Even though our 6-unit project benefitted from a reduced parking requirement due to the Transit Oriented Communities program, fitting the required parking lots, and complying with municipal parking codes was a game of inches.
In many instances, parking requirements didn’t allow the building of the full number of units permitted by the density regulations, even in transit-rich areas. In some cases, the required amount of parking physically doesn't fit on a 50-foot-wide site without extremely costly excavation. Parking minimums are a huge and unnecessary burden — not only for standardized development, but for any housing development.
But tides are finally starting to shift in California, and Assembly Bill 2097 eliminating parking minimums for new housing projects within a half mile of public transit has passed the California Assembly on May 26, 2022. If it passes the State Senate it will dramatically increase the opportunities for the development of multifamily housing.
Standardization opens a door for prefabrication
Standardized development is possible with traditional construction methods. It also can help make prefabrication viable by establishing a pipeline of very similar projects.
Prefabrication has not yet gained much traction in the United States because it faces a "chicken-and-egg" problem. Prefab factories need consistent demand from developers to be successful and deliver economies of scale. Developers need immediate cost benefits from prefabrication to justify switching to a new process and a new set of risks.
Initially, the main burden of promoting prefabrication was on startup manufacturers (FactoryOS, Plant Prefab, Katerra, etc); they invested in facilities in the hope that developers eventually would use their standard designs. Ultimately, they had to service bespoke projects and customization requests, negating most of the cost and time benefits of prefabrication.
A new generation of prefab startups like Juno, Madelon, and several others understood the importance of controlling the development pipeline, and they made co-development an essential part of their business model and offering.
At Apt, we design the buildings with prefabrication potential in mind and expect to gradually phase it in.
Standardization can mean better design and sustainability
A standard development product would allow developers to allocate more resources for the architecture and engineering when compared to one-off projects. In contrast to a one-off design, that upfront investment can be recovered across multiple projects while making each of them better designed, more sustainable, and, as a result, more successful. These improvements are especially important for smaller buildings (sub-institutional scale), where thin margins often push developers to skim on architectural costs.
A case for vertical integration
From the beginning, we pursued Natively-Integrated Development — leveraging technology to streamline the development process end-to-end. We envisioned a future where a developer could immediately locate every address eligible for one of the standardized development products, get a thoughtful schematic design of what could be built there while being adapted to the site conditions, and instantly evaluate its financial feasibility.
We started this process by evaluating available software tools and their applicability to standardized development. We discovered that they are primarily suited for traditional development: they target a specific process in the value chain and create a horizontal product that could support extreme customization of one-off projects.
This is not to say that these tools are not helpful, quite the opposite. They established an essential foundation for innovation in the building industry, which has been growing at an accelerated pace.
In order to complete our project, we had to vertically integrate all of these pre-development stages. The required steps ranged from conducting custom GIS analysis; to building proprietary software and data dashboards; to assembling a multidisciplinary team of architects, engineers, land use, code, and prefabrication experts to design fully compliant standard buildings.
This is a complex and costly process and it’s hard to expect developers, especially those working on a sub-institutional scale, to have the resources to develop and maintain similar capabilities in-house. As a result, we are exploring how to share our software and designs with other developers interested in standardizing their development process. In the end, our mission is to support the creation of much-needed beautiful and sustainable housing in cities.
We’re grateful for your time and we hope that you discovered something interesting in this case study. We’d love to hear your thoughts, feedback, and ideas for new projects. Feel free to reach us at [email protected].