Shipping Containers: The New Real Estate
Housing startups in the U.S. and other countries are turning to shipping containers to provide lower-cost, mixed-use, affordable, and student housing.
Shipping containers are essential to transporting everything from smartphones to Cuisinart appliances around the world. But the once lowly container is now emerging as a game-changer, disrupting several sectors of the real estate investment market, not least housing, retail, and hospitality.
Indeed, as the global economy continues its slower growth, many of the world’s 17M shipping containers are proving ideal solutions for real estate developers wanting efficiency and flexibility.
The $210M redevelopment of New York’s historic Pier 57 will use more than 450 shipping containers to house retail stores and food stands, a design that will preserve the pier’s Marine & Aviation building and showcase the capability of a logistics solution as a rentable space. To design the interior, Pier 57 developer Young Woo & Associates brought in LO-TEK, an architectural studio based in New York and Naples, Italy that initiated the concept of using standard 40-foot shipping containers to build commercial property.
LO-TEK has also used the shipping container in the design of a building for Spacious, a real estate startup that’s searching for a site in New York City to erect a prototype structure combining a coffee shop, hotel rooms, and coworking space. Spacious co-founder and CEO Preston Pesek says in an email interview that the plan is to lease “a site where we can erect and operate with a minimum duration of 10 years, then disassemble and return a vacant site to the landlord.”
The concept is all about the maximum utilization of space. Spacious, for instance, offers hotel guests a discount rate if they allow their rooms to be rented as conference space when they’re out and about. “It’s wasteful to design single-purpose spaces that are productive for only 50 percent of every day, in locations where demand for space exists 100 percent of the time,” according to Spacious’ website.
That underutilization of space also extends to affordable housing. Kasita, a real estate startup producing mobile, micro units has leased land in Austin, Texas for a rack that will hold nine 208-square-foot studio apartments built in shipping containers. It’s the brainchild of Jeff Wilson, a professor and dean at Huston-Tillotson University, who earned the moniker “Professor Dumpster” for living in a 33-foot converted trash container for a year to explore affordable housing concepts.
With help from industrial design agency Frog, Kasita has developed a patent-pending tile system that allows for virtually infinite combinations of shelving, storage, and functional items such as clocks and sound system—with a subwoofer in the floor—plus spa-like amenities like an in-wall fireplace and live plants.
The economic rationale is to unlock value by building on small tracts of land previously deemed unusable; Kasita aims to rent at just half the market rate of a traditional urban studio apartment. Kasita declined a request for an interview, but appears busy—following the planned launch in Austin in the spring of 2016, Kasita’s development team is lining up potential partners in nearly a dozen cities including Chicago and Stockholm.
It may not be long before shipping containers also appear in student housing portfolios. The largest container city in the world, Keetwonen, is a student housing complex in space-constrained, rent-controlled Amsterdam. Started in 2006 with just 60 units built in China by Dutch manufacturer Tempohousing, the project now includes more than 1,000 units on 4.5 acres.
Tempohousing founder Quinten de Gooijer hatched the plan after two of his cousins came to study in Amsterdam but were unable to find housing. Dutch rent controls did not allow for charging the amount needed to support development costs, so De Gooijer, a real estate developer, converted containers to housing units at a low enough cost to stay below rent ceilings.
Intended to be moved from its original site after five years, Keetwonen’s relocation has been postponed until 2016. Offering private bathrooms instead of common facilities, Keetwonen has become one of the most popular student accommodations in the Netherlands—the waiting list is more than a year.
Shipping containers could prove to be the new niche real estate sector, as startups in the U.S. and other countries show the potential of using the steel box as hotel rooms, as well as for affordable and student housing.
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