Housing Shortage Solutions Could Be the Next Wave of Innovation
The lack of affordable housing in major U.S. cities and urban areas is a real dilemma, particularly for the tech industry, which is facing a severe housing shortage for its high-skilled and highly mobile employees. As a result, some of the nation's largest tech employers have started to focus their efforts and investments on innovative housing shortage solutions.
How Tech Is Engaging in Housing Shortage Solutions
Fox News reports that Google's parent company, Alphabet Inc., signed a deal with modular-home startup Factory OS to buy 300 modular apartment units to use as a short-term housing shortage solution for employees at its Bay View campus in Mountain View, California. Facebook, meanwhile, plans to build 1,500 apartments near its campus in Menlo Park, California, and 15 percent of the units will be considered affordable housing, reports Fox News.
Housing Shortages Hit Tech Hubs Beyond Silicon Valley
With home prices and rents soaring, and new home construction falling far short of demand nationwide, the search for housing shortage solutions isn't contained to Silicon Valley. The Federal Reserve Bank of Kansas City notes that construction of new homes as a share of U.S. households is at a level as low as it was in the 1950s.
For example, the city of Reno, Nevada, is facing a housing shortage after luring Tesla Inc. and other tech companies to the area, according to The Atlantic. The University of Nevada at Reno has agreed to rent dorm rooms to Tesla and its partner Panasonic Corp, Dow Jones reports. The dormitories will house 800 temporary Tesla battery factory employees.
For other tech companies, the implications are clear — if companies want to attract the best and brightest minds to work for them, employers are going to have to go beyond a paycheck and find creative housing shortage solutions. "The fact that companies that design software and build algorithms for a living are having to build housing is really an indicator of the failure of our traditional housing supply model," reports the San Francisco Chronicle.
Could the Future Be Modular?
The dire shortage of affordable housing presents a unique opportunity for housing developers. "With the growth in population and households that we're seeing, there's going to be an awful lot of demand for pretty much every type of housing out there — homeownership, rentals, single-family and multi-family," says Jamie Woodwell, vice president of research and economics for the Mortgage Bankers Association, according to the KeyBank report, Tectonic Trends Changing Rental Housing Investment.
For housing developers and contractors, prefabricated components and modular construction solves many issues they traditionally face, including material and labor costs, and long lead and building times. Off-site construction can also allow developers to better control the building process and harness productivity while reducing errors and environmental waste.
According to Fortune, the construction and housing industry is increasingly embracing modular and prefabricated construction techniques as a viable housing shortage solution. The Wall Street Journal estimates modular construction, like the units Google is exploring, could reduce construction costs in the Bay Area by 20 to 50 percent.
An Investment Opportunity
As tech companies and city leaders seek housing shortage solutions to address the affordable housing crisis, developers and their capital partners are well-positioned to put all the pieces together to make development happen, both for their own financial benefit and for the benefit of those seeking housing.