On a corner lot in Belltown, the crane swinging a slim rectangular panel into place looks like an unremarkable bit of everyday construction activity. But out of view to the casual observer is what’s inside the panel. 

“They just put the radiant heat in that apartment when they set the panel,” said Arlan Collins, looking on. It took about three and a half minutes, then the crew moved on to the next one.

Collins is CEO of Sustainable Living Innovations, the developer at this planned 15-story apartment tower constructed using hundreds of panels with heating, electrical and plumbing equipment inside that were built in a Tacoma factory. 

Set to include 112 apartments, the project is the latest experiment in modular construction, an ongoing effort in the building industry to bring the efficiencies of a factory onto the job site and shave off time and costs. The technique allows off-site crews to build panels at the same time others prepare the development site. 

In Belltown, crews guiding the floor panels into place Tuesday will continue the action hundreds of times over, alternating between laying constructed floor and wall panels.

“We’re building a building like you’d build a car or an airplane,” Collins said in an interview.

Sometimes built with blocks stacked like Legos and other times with panels swung into place as walls and floors, modular construction has caught the eye of developers and policymakers looking to streamline housing construction, especially in pricey West Coast cities facing housing shortages. Still, questions remain about just how much these techniques can save. 

SLI’s all-electric apartment building has plenty of environmental bona fides. The tower will feature hundreds of solar panels on the exterior, water and heat recovery systems and other efficiencies. According to SLI, the building is the first high-rise apartment tower anywhere to meet net-zero energy standards set by the International Living Future Institute, which also certified the Bullitt Center.

SLI, which reported this spring it had raised nearly $30 million from investors, constructed a similar building in the University District and plans others, including one with the Downtown Emergency Service Center for people experiencing homelessness.

Seattle’s Office of Housing will provide partial funding for the DESC project as part of an effort to back permanent supportive housing developments that promise time and cost savings.

“I think we’re all very frustrated with the time it takes to produce housing in a community with a need so great,” said Sondra Nielsen, director of property development and facilities at DESC.

DESC plans to open the building in March 2023. Nielsen said the project’s expected construction timeline is “just shy of 15 months,” compared with the usual 15 to 17 months. “We’re hopeful we can do better, but we won’t know until we do it,” Nielsen said. 

Modular construction has gained traction as developers look to rein in costs, said Christopher Ptomey, executive director at the Urban Land Institute’s Terwilliger Center for Housing. 

Construction projects like high-rise apartment buildings can sometimes take up to two years. Modular construction has the potential to reduce schedules by 30% to 50%, according to industry groups.

But the strategy has risks. Transporting the panels or building blocks to the site can add cost. For companies that create new factories to build their panels or Lego-like blocks, the upfront costs are steep, Ptomey said. Local regulations may lag new technology, and a month saved in one phase of the project can easily be lost in another.

Daniel Stoner, who has developed low-rise apartment buildings using the Lego-style technique known as volumetric modular construction, said he expected to save time but spend about the same in construction costs.

“Our experience was just the opposite,” Stoner said. 

Construction for two Seattle buildings turned out to be about 15% to 20% cheaper than building the projects with traditional methods, Stoner said. But the timeline stretched because of needed training, city permitting hang-ups for a new type of construction and because of the pandemic.

Financing new building techniques can be difficult. Some lenders “perceive modular technology as untested or speculative and they’re hesitant to finance that,” Stoner said. (Even so, he’s optimistic. Stoner plans another building in the same style in Lake City.) 

According to the city, a “cost driver” for SLI projects “has been the time associated with securing appropriate additional private financing for the projects. This represents a necessary startup cost that, as seen with other newer organizations, can be mitigated once shown to be replicable,” said Seattle Office of Housing spokesperson Miriam Roskin in a statement. 

For now, modular projects will also encounter challenges facing the entire building industry: supply-chain havoc and a labor shortage. 

Container ship congestion along the West Coast has affected SLI’s “product delivery in general,” Roskin said. 

Collins, from SLI, says the company is finding ways to save time and costs. “We expect it’s going to get faster as we build the next one,” he said.

Across the industry, modular construction became more common from 2015 to 2018, but remained less than 4% of the market, according to industry data. 

“There are a lot of attempts to apply manufacturing to housing production,” Ptomey said. “What’s not clear is what’s the path to determining which of these can really achieve scale and be replicated?” 

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