Building apartments in a factory saves time, attracts more people to construction

They're building apartment buildings inside a factory in Owatonna, Minn.

Not just parts, the whole apartments. Floor to ceiling, bathroom to kitchen, plumbing to electrical, countertops to toilets.

The action inside the factory at Rise Modular is a sight, and it's the kind of productivity improvement that's needed when the workforce is tight or shrinking.

The buildings are constructed in standardized parts, called modules or mods, that are up to 16 feet wide and 70 feet long. To move down the assembly line, air casters lift the mods a few millimeters, allowing two people to easily push them along.

"Everything's done in an ergonomic, climate-controlled environment," Christian Lawrence, the company's founder and chief executive, said after we toured the plant last month. "With cranes and other kitting and jigs, and technology, we can be more efficient with our labor."

Rise built the 202-unit Pentagon Village apartment building that is near completion in Edina. It took 205 modules. Each was trucked up Interstate 35 to W. 77th Street and Computer Avenue and stacked in place by crane. Ten days ago, I watched one of the last modules go up to its spot on the fifth floor. It took less than five minutes.

Homebuilders have long used factories and assembly lines to build parts of homes, like wall panels and roof trusses. Sears and Montgomery Ward sold kits to build houses more than a century ago.

But Rise is one of the first in the country to apply what the industry calls "volumetric module" techniques to apartments and other buildings. It started its first project in spring 2020, a 27-unit apartment building in Minneapolis that was stacked into place that September. It has finished, or nearly finished, five others and has three in the pipeline, including its first hotel.

"Not all projects are a fit," Lawrence said. "But many projects within multifamily and hospitality are a great fit."

The big advantage is that it takes less time for a project to get built. In a year, Rise can complete a building that might take 18 months using conventional techniques, even with some pre-built parts.

It takes the 100 workers at the Rise factory about two weeks to complete a mod. Rise schedules the delivery of mods in concentrated time frames, minimizing the duration a neighborhood is disrupted during construction. Rise has a big yard to store finished mods before they're sent to the construction site.

From an economic standpoint, the arrival of factory processes to multifamily construction represents a major efficiency gain. Another prominent Minnesotan, Devean George, the former NBA player-turned-developer, is already planning to build a similar factory in Minneapolis.

Four things have come together for Rise. First, demand for multifamily homes remains high in the Twin Cities, many of Minnesota's smaller towns and in much of the Midwest. The region has underbuilt for years.

Second, the labor shortage is especially bad in construction. Owing to the regular schedule, steady work and variety of jobs it offers, Rise taps a broader base of workers. It employs far more women than a traditional construction site, for instance.

"We can take individuals who have no prior construction experience," Lawrence said. "Because it's a manufacturing line, there are certain things they can do right away and then there's training we do to have them grow professionally."

Third, technological innovations like broadband networks, robotic saws and air casters matured. The interaction between architects and builders also changed. "We work out all the problems before it ever hits our production line," said Heather Glasscock, the director of drafting at Rise.

Cuningham, the Minneapolis architecture firm that designed Pentagon Village, developed a new tool to keep track of the design and model files they exchange. In the past, architects gave blueprints to contractors, then digital files.

"But they were still drawings. What we're doing now is working with a manufacturer in a model to understand how to put things together," said Jeffrey Schoeneck, principal at Cuningham. "It can look like a derivative process. But the reality is, it's a completely different way of delivering the work."

And the last thing is capital. Lawrence's father, Jim, was chief financial officer of General Mills 20 years ago and later became CEO of Rothschild North America, the investment bank. Their family office, called Lake Harriet Capital, financed Rise after Lawrence spent some time in real estate development.

He declined to talk specifics on financing, but he said other investors have approached Rise and the firm may eventually turn to outside capital to expand.

"We're focused right now on delivering for our clients and various project stakeholders, but we're starting to think about what growth looks like," Lawrence said.