Rising construction costs are pushing Oakland developers to rethink traditional construction methods to make sure much-needed housing continues to get built.
“It is an issue right now that we are all facing increased construction costs,” UrbanCore Development CEO Michael Johnson said during Bisnow’s recent Oakland Construction & Development Update event. “What will happen is some projects will not move forward as a result of that.”
Double-digit increases in the cost of new construction projects are not driven solely by increases in material costs, but also by higher profit margins and greater labor costs as contractors struggle to find a qualified workforce, he said.
Several developers have turned toward using modular units, designing more efficient floor plans and creating new building technologies.
OWow is developing a type of unit that can adjust the number of bedrooms with a push of a button. Mechanized, acoustically rated walls would raise and lower to create up to four bedrooms, oWow founder Danny Haber said. His company has been building macro-units in Oakland that use efficient design to cut down on construction costs.
Other developers have been pursuing modular construction. UrbanCore Development decided to go modular on its Coliseum Connections project about five years ago, Johnson said. Conventional construction was more expensive, and an analysis estimated about a 10% cost savings on a $40M construction budget, he said.
The modular units are expected to be fully in place by Friday and the 110-unit mixed-income housing project is expected to be completed in January.