By Jack Stubbs
In the perpetually active commercial and residential real estate markets, issues around densification and housing affordability continue to significantly impact the industry, and companies are continually bringing new products to the market in an attempt to capitalize on the pressurized housing market.
Kasita, a company founded in 2015 in Austin, Texas, is a manufacturer of smart modular homes and one of the few companies in the world that manufactures “live-in ready” units that can be installed and lived in on the same day.
We recently spoke with Head of Marketing Nelson Rudolph and Sales Executive Jeremy Klitzman about how the company looks to address issues around housing affordability and how offsite, modular construction is becoming an increasingly prevalent trend in the changing construction industry.
What can you tell me about Kasita? Where does the company operate, demographically and geographically? Who are the company’s primary clients and users?
Kasita’s headquarters and manufacturing facilities are located in Austin, TX, but it distributes homes and multifamily complexes nationwide. Kasita’s customers are made up of real estate developers who are looking for a modular solution to their project, and homeowners who are interested in installing an ADU (Accessory Dwelling Unit) in their backyard as additional space or a source of secondary income. The customers of both short and long term rentals as well as the dwellers in larger developments range from recent graduates and millennial’s to empty nesters.
What are some of the main distinguishing features of a Kasita home, and what are some of the different product types available? How does a Kasita home different from a typical residential dwelling?
Kasita’s products include the Independent, a live-in ready ADU, and Community, a stackable and adaptable solution for multi-family housing. Both products can be configured as a Studio, a single unit, or a Pair, 2 units combined to make a 2 bedroom 2 bathroom floorplan. There are three package tiers that start at $89k and go up to $129k for the Studio and $159k to $209k for the Pair.
Kasita’s distinct use and reuse of space is what sets us apart. With more than 10,000 of design hours into our Studio unit, our team of architects and engineers have optimized every cubic inch for performance, aesthetic, and manufacturing.
Can you elaborate on the planning/construction process for these homes? How does this process differ from that the typical construction of a home, and what are some of the primary advantages of this construction method?
Kasita makes prefabricated units, so everything is built in our factory here in Austin and then shipped to the build site for installation. This allows us to to repeat the same building techniques and processes over and over again to achieve precision building. When you want a new car, you don’t buy a bunch of materials and bring them to your driveway and hire a crew of builders to construct it on-site. You buy a car that has been manufactured by a team of seasoned experts in a factory. That is very much the same mentality we are after.[The] advantages [of off-site construction] over on-site construction [include]: no weather delays [and] less noise and traffic in neighborhoods where units will go because we build offsite. Markets that are strapped for laborers (like northern California after the fires) can still pay reasonable prices for construction rather than having to cave to super high development fees. [There is also] no need for expensive lay-down yards in dense cities during multifamily complex installation.
How does modular construction fit into the design process? Is this becoming more of a trend from clients’ perspectives?
Modular is a quickly growing trend that is going to become the norm. 98 percent of construction is either over budget or over timeline, which modular can fix with known material costs, fixed labor costs, and proven timelines. Because modular is built offsite, it isn’t susceptible to site-specific conditions such a labor costs and weather. Kasita’s assembly line manufacturing is highly precise, allowing construction to be within 1/16 inch tolerances, which streamlines onsite installation and significantly adds to the durability of the structure.
How do factors like the skilled labor shortage, rising construction costs and inefficient job sites continue to play a role in the industry?
Offsite construction and the “bulk purchasing” of a manufacturing facility mitigate both labor cost fluctuations and project-specific material costs. Because Kasita is purchasing materials for multiple different projects, volume discounts help us deliver a higher quality product to our end consumer at a comparable price. Another key benefit of offsite construction is its ability to overcome the complexities of inefficient job sites by reducing the need for costly laydown yards and dependency on local labor forces.
More generally, are you seeing the demands of clients changing over time? How is increasing cost of living influencing what clients are looking for when they design a Kasita home?
The in-unit amenities are the same amenities that you’d find in any standard home, from an induction cooktop, to a washer/dryer, to a walk-in shower. Every Kasita is equipped to be a place you can call home.
The trend we are seeing is that the younger generations (Millennials and Gen Z) are starting to sacrifice possessions for experiences. What this means is that the more we can utilize and re-utilize spaces in our Kasita homes, the more efficient the space gets, allowing our customers to purchase less square footage and focus more on what’s outside the space: experiences.
That said, we also get a a lot of calls from baby boomers looking to downsize now that they are retired and their kids are out of the house. To adapt to this market segment, we are building a version of our units that are ADA compliant in order to serve as many individuals as possible. Kasita is meant to be a platform for everybody.
What are some of the challenges involved with tackling the growing housing crisis? What role do Kasita and other companies have to play in this?
One big challenge is the variability of the zoning and building laws in each city. Each city is different in what kind of building they allow, how much construction they allow, where that construction can be, and how easy it is to get permitted. That makes it so a builder like us, operating across the whole country, has to have different design guidelines and versions of our unit for each state.
Related to that is NIMBY-ism: the belief that development for more housing and densifying neighborhoods is good, just as long as it’s not in your backyard or neighborhood. This greatly limits where you can develop and often leads to concentrated redevelopment in certain areas—often underserved, lower economic status areas—that can contribute to displacement and gentrification.
Because Kasita can be used for urban infill projects, which tend to be less disruptive to neighborhoods, companies need to both advocate for common sense zoning [and] provide innovative options to help put a dent in our lack of housing solutions.
How does Kasita offer something unique to other companies? To what degree does the company look to take advantage of available or previously underutilized land or urban infill developments?
Time to market and ease-of-use for developers. Because modular is done offsite and with precision building, we can cut down on development times and allow developers to open the doors on their project sooner without sacrificing any quality. That means they can start to make back their investment quicker, but more importantly, it means we can more quickly get more units for people to live in on the market.
Because we’re a young company, we are able to partner with other companies on new concepts. We know we have a strong platform, but we don’t have all the answers; no one does. By working with innovative developers or manufacturers we are able to maximize Kasita’s potential and grow. Urban infill is definitely a priority.