The 2018 International Construction Market Survey by Turner and Townsend revealed that NYC has the highest construction costs in the world. On average, you can expect to invest $302/sq.ft. in a high-rise multifamily building, and $565/sq.ft. in an office building.

High construction costs have led to a shortage of affordable housing, and the Di Blasio administration has responded with the Housing New York 2.0 plan - delivering 300,000 new affordable housing units by 2026. There was already a goal of 200,000 units by 2024, but it will most likely be reached two years earlier, in 2022.

Lack of affordable housing also leads to traffic congestion, since many people who work in NYC have moved to surrounding towns and cities with lower rental rates. In other words, more affordable housing would help solve not one, but two of the main challenges faced by the city government.

Applying Modular Construction in Affordable Housing

Building affordable housing projects is a significant challenge in the world’s most expensive city for construction, in great part because both land and skilled labor are expensive. Consider that skilled worker wages in NYC often exceed $100/hour.

The concept of modular construction is very promising, since it allows a building to be manufactured off-site in modules and for a lower cost. These modules are then transported to the project site, where they are assembled in just a fraction of the time required with conventional construction methods.

Modular construction has already been applied successfully in some NYC projects, but it isn’t a mainstream concept yet. Consider the Idylls project, where the MEP design was delivered by NY Engineers. The six-story building uses the first floor for retail, and the five upper floors are luxury condos. Thanks to modular construction, the project only needed six days of on-site work.

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Although Idylls is a luxury project, the main advantage of modular construction is cost reduction, making it a potential answer to the shortage of affordable housing in NYC. Aware of this, the NYC Department of Housing Preservation & Development (HPD) has issued a Request for Proposals (RFP) for an affordable building using modular construction. The following are some key facts about the project:

1. This is the first time NYC issues an RFQ for an affordable housing project with modular construction. The NYC government plans to replicate the concept in future developments based on the experience from this project.
2. The project will be built in city-owned land. The L-shaped property has an area of 49,397 sq.ft. and is located in East New York, Brooklyn, close to the Grant Avenue “A” train station.
3. The RFP specifies 100% affordable housing units. The project is a mixed-use and mixed-income development, as part of the Housing New York 2.0 plan. The lowest-cost units will be accessible to a three-person family making as little as $28,170.
4. The property can accommodate between 62 and 100 housing units, according to the NYC HPD. Proposals with a significant number of units for very low- and low-income households will be given preference.
5. The deadline for proposals is September 10, 2018.

The East New York neighborhood, where the project will be located, was recently rezoned to incentive housing development. Since zoning rules often limit the applicability of modular construction, strategic rezoning is a key element of the Housing New York 2.0 plan. It is important to note that modular construction does not compromise building code compliance. There is a common misconception that modular buildings are lower-tier structures, but that is simply not the case.