Large players such as Skender and IKEA are betting that prefab building practices can help meet the rising demand for senior housing.
Chicago-based Skender has morphed in the past 18 months from a general contractor to a vertically integrated manufacturer of prefabricated modular building components for multifamily, senior housing, health care and commercial buildings. The company cut the ribbon on a production facility on Chicago’s Southwest Side in February, and had its first prototype modular units built four months later. Skender has built senior living projects utilizing conventional methods and already is seeing interest from senior living developers in its prefab process.
Meanwhile, Swedish furniture giant IKEA partnered with global construction firm Skanska to create Boklok, a prefabricated affordable housing arm that has built 11,000 homes in Sweden, Denmark and the United Kingdom. In June 2017, Boklok announced the launch of SilviaBo, a new type of prefabricated home for people with dementia, developed in conjunction with Queen Silvia of Sweden and her charitable foundation.
And there are other signs that prefab and modular construction methods are poised to make an impact in senior housing. Elder care innovator Dr. Bill Thomas has spent years working on — and generating interest in — his Minka concept of 3D-printed tiny homes, housing seniors ranging from independent living to memory care.
The senior living industry already has a history with prefabricated and manufactured homes. Mobile home parks have proven popular with active seniors looking to extend their quality of life and their nest eggs, as well as institutional investors and real estate investment trusts seeking stable, long-term investments.
These are macrodynamics that directly point to long-term benefits.Skender CTO Stacy Scopano
Prefabrication is gaining popularity among contractors and developers looking to cut down on construction costs. The Skender and IKEA initiatives signal that prefabrication may be nearing a breakthrough to mass acceptance. Senior living developers and operators can use this growing trend to address several industry issues, but there are still some obstacles to overcome before prefab becomes commonplace.
Creating a future building model
Prefabrication is the practice of assembling components of a building in a factory or other facility, then transporting the completed product to the construction site, to be placed within the structure.
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Prefabrication holds many advantages to the way buildings are currently constructed. It can save on costs, speed up construction schedules, reduce the need for rework, improve safety and cleanliness on a job site and lead to higher quality buildings and a greater ability to win jobs.
The main obstacle may be a construction industry reluctant to embrace innovation, even as prefabrication is becoming a growing component of the sector overall. The average use of prefab was 35% in 2016, compared to 13% in 2010, according to a 2017 report by the Fails Management Institute (FMI). This is despite potential benefits: For every dollar spent on prefab, contractors realize a nearly 13% return on investment as a quantifiable benefit to the project, according to a 2014 survey from Chicago-based Mortenson Construction.
For construction companies, adopting prefabrication requires significant upfront investment, a long-range strategy to convince developers of the benefits, and patience, Skender CTO Stacy Scopano told Senior Housing News.
Skender decided to make the play into prefab in part because the company’s leaders sought to eliminate inefficiencies in the existing, fragmented construction model, with manufacturing, design and construction separated from each other. In February 2018, The firm acquired a boutique design studio, Indigenous Architecture, and hired Tim Swanson, formerly of design firm CannonDesign, as chief design officer. Scopano joined Skender earlier this year.
Skender is applying assembly line principles to its prefab manufacturing plant. The frames for its modular units can be assembled in one section of the plant, then lifted via gantry cranes to another point where the plumbing, ventilation and electrical is added, then to another point where walls, flooring and insulation is installed and the process is completed. Everything is pre-cut to size, so that it can be dropped in and secured, Scopano told SHN.
The process requires coordination between assembly teams and, as workers become more accustomed to the process, Skender envisions a four-day timetable to complete a modular unit.
In the months since Skender opened its manufacturing plant, it already has some affordable housing projects running down the assembly line. The firm also has fully fitted mockups of market-rate housing, as well as distributable health care models such as wellness centers and exam rooms. Scopano hopes this effort will eventually lead to those economies of scale that the construction industry needs.
And this is only the first generation of modular construction, designed with high efficiency in mind. Skender’s models contain well-insulated wall systems and triple-pane windows to reduce energy usage, which can be adapted for senior living once pre-fabrication achieves those economies of scale.
Scopano compares the push toward prefabricated construction to how smartphone technology has become so commonplace that it has pushed down pricing on phones over the past decade.
“These are macrodynamics that directly point to long-term benefits,” Scopano said.
A competitive advantage for senior living
Prefabrication can be a solution to some of the development headwinds facing senior living.
U.S. construction spending in the first half of 2019 totaled $615.8 billion, according to Commerce Department data, continuing a five year upward trajectory. According to The Weitz Company’s summer 2019 senior housing construction cost index, high-end assisted living facilities can cost as much as $296 per square foot to build. Common areas in high-end independent living communities can cost between $343 and $420 per square foot.
Prefabrication would save on costs, reduce construction timetables and bring buildings online sooner.
Prefabrication could be harnessed to meet the growing demand for middle-market and affordable senior housing. Modular units can be stacked on top of one another within a building’s frame to create low- and mid-rise senior housing communities in urban locations, Scopano said. Or they could be placed side-by-side to create walkable, active communities in suburban or rural markets.
Still, there are challenges to prefab senior living. For example, the shortened timetable involves more front-loaded spending on construction, and could put more pressure on projects to quickly fill up after opening, Scopano noted.
And, even if prefabrication could enable more economical development of apartment-style senior living buildings, it also could create more alternatives to congregate-style housing. IKEA’s Boklok efforts are a case in point.
The goal of that initiative is to allow seniors living with dementia to age in place in their own homes. With the SilviaBo pilot, Boklok homes are built with modified interiors and layouts to accommodate the needs and reduce the stress-related triggers of seniors living with dementia. These homes are connected to shared social facilities and amenities, creating a community for these residents.
The first SilviaBo apartments are being completed outside of Stockholm, and IKEA is scouting other sites in and outside Sweden for future projects. Boklok did not respond to requests from Senior Housing News to comment for this article.
But there might be a middle route, as Christian Living Communities is demonstrating.CLC is in talks with Minka to build a middle-market small home community for seniors in Colorado.
In this model, a traditional senior living provider would leverage modular building to create a campus of small homes, where it could offer services at a more affordable price point.
Whatever form it ultimately takes, the recent moves from Minka, Boklok and Skender suggest that it’s only a matter of time before prefabricated housing becomes more commonplace in senior living.
So far, initial interest in prefabricated units has been strong, Scopano told SHN. In addition to touring senior living groups through its new plant, Skender is in discussions with multifamily developers, health care groups, warehouse and industrial developers and major hotel chains about creating models for projects across the country. These potential stakeholders are surprised at the costs Skender is quoting them.
“We’re hearing from companies in coastal markets and the numbers we project are way lower than even their projections,” he said.
Skender is weighing how far afield it can feasibly transport its modular units, but in the meantime Chicago will be an epicenter of the prefabricated construction movement, and a market to watch as the trend continues to gain steam.