Senior housing developers on the hunt for creative, cost-cutting construction solutions may want to take a leaf out of The Wolff Company’s book.
The real estate development, investment and management firm first entered the senior housing sector in 2016. Before that, The Wolff Co. worked primarily in the multifamily sector.
Going forward, all of Wolff’s senior housing projects—including its upscale Revel-branded independent living communities—are expected to be built using an offsite fabrication method that saves both time and money, Craig Curtis, head of the architecture and interior design group at Katerra, told Senior Housing News.
Menlo Park, California-based Katerra was co-founded by Fritz Wolff, the executive chairman of The Wolff Co. Scottsdale, Arizona-based Wolff is currently Katerra’s biggest customer, as it has spent more than $500 million with Katerra, according to Bloomberg.
‘Solves a lot of problems’
In numerous industries—and in the senior housing sector, specifically—construction costs continue to rise and a shortage of construction workers no signs of letting up.
Though modular construction has been floated as a solution to these and other issues currently plaguing the senior housing industry, Katerra isn’t in the modular construction business, Curtis stressed.
“We’re not building pods and shipping then down the road on flatbed trucks, fully assembled,” he explained. Instead, Katerra is assembling wall panels—fully complete with windows, electrical wiring, plumbing and more—and stacking them “very efficiently” onto a truck, which then transports them to the final building site.
This process has proven cost-effective in student housing and market-rate multifamily development—and it can work wonders for senior housing developers that are struggling to find enough construction labor.
“It solves a lot of problems for us,” Curtis said. “There’s an extreme labor shortage out there right now in the [construction] space, and [many developers] cannot find skilled labor to build their projects.”
Developers working with Katerra do not have to hire as many construction workers, as much of the physical labor is done in Katerra’s factory. Plus, the process of building this way is “much less disruptive on-site,” as well as quieter, safer and faster, Curtis said.
Katerra’s methods have begun to catch on in the senior housing industry. The firm is doing business with Chicago-based real estate investment, development and management firm CA Ventures, as well as currently working on “a number” of senior living projects for The Wolff Co.
By 2020, Wolff is hoping to have teamed up with its operating partner, Clearwater Living, on 18 senior housing communities in various stages of development.
Following Marriott’s lead
A hospitality giant—which, coincidentally, many companies in the senior housing industry strive to emulate—has recently found success with modular construction.
Hotel company Marriott International (Nasdaq: MAR), which senior housing providers have long looked to for ideas related to branding, wellness and design, launched a pilot modular construction initiative in North America in 2015. Then, in 2017, Marriott announced it was expanding its modular construction initiative, saying it anticipated signing 50 hotel deals that year that incorporated prefabricated bathrooms or guest rooms.
The same perks Marriott has seen from modular construction—including mitigating the effects of the labor shortage and reducing project costs—would also benefit the senior housing industry, suggested Chris Frommell, managing partner at Milwaukee, Wisconsin-based senior living development services firm Direct Supply Aptura.
“I would portend that senior living communities, with as much repetition as you see, are a prime candidate [for modular construction],” Frommell told attendees at the 2017 Senior Housing News Summit in Chicago.
All things considered, modular construction is “a tremendous way” to think about building senior housing, Frommell added.
“At the end of the day, building well with modular construction is building better, faster,” he concluded.
Written by Mary Kate Nelson