First Shipping Container-Construction Multifamily Building Breaks Ground in U.S.

Posted on January 4, 2013

More than 21,000 shipping containers arrive in the United States on a daily basis. Many of them originate in China, where it is cheaper to build new containers than to ship them back after their maiden voyages. Currently, over 700,000 containers are stockpiled on prime waterfront real estate throughout the U.S. with no use, purpose or method of disposal. But one forward-thinking real estate developer—Three Squared Inc.—is pushing ahead with cargo container residential and commercial construction initiatives, not only finding “homes,” so to speak, for retired cargo containers, but thriving as a company even while the traditional bricks-and-mortar construction industry flounders in the midst of the troubled economy.

Three Squared Inc., a sustainable real estate developer, is currently slated to build over $109 million in projects in the U.S. and abroad over the next two years. The firm, which offers systemized and sustainable construction using shipping containers to create affordable luxury buildings, says that this construction alternative is growing in demand due to its superior cost efficiencies, heightened profitability, minimal building time and an expanding acceptance in the marketplace. Its patented Cargolinc System provides architects, builders, developers and private owners with a comprehensive three-step process that surpasses green and sustainable construction and quality standards at a much reduced cost and in a fraction of the time it normally takes to build sustainably.

Three Squared’s Rosa Parks condo complex in Detroit, which is scheduled for ground-breaking early in 2013 and has an approved $603,000 tax credit, will be the first multifamily property constructed from recycled shipping containers in the United States. The 20-unit, 26,000-sq.-ft. project will incorporate 93 shipping containers and will feature ductless heating and cooling, tankless water heaters and other amenities to reduce each unit’s energy costs by up to 80 percent. A model center, to be used to sell condos, is now underway on Detroit’s Michigan Avenue. In addition, Three Squared is developing a $4.5 million recreational cabin project, featuring 65 units, on 67 acres of prime property in Lake Tahoe.

NREI spoke with Three Squared CEO Leslie Horn about the benefits of building with retired cargo containers and what the future holds for this innovative approach to building. An edited transcript of that interview follows.

NREI: In the wake of Hurricane Sandy, many in the real estate industry are rethinking disaster preparedness and looking at alternative building approaches. How does cargo container-based construction rate in this regard for both commercial and residential uses?

Leslie Horn: Strength and durability of shipping container-based construction far exceeds traditional stick-built and most modular construction in both residential and commercial. Let’s face it, if a tree gets uprooted and falls on your house, and if [your house] is constructed with shipping containers, there is far less damage to the frame of the home and, in most cases, therefore no damage to the interior infrastructure, drywall, lighting systems and, most important, personal items. If the structure is safe, gas pipes are not bursting, thus [the cargo container structure is] reducing the chance of gas or electrical fires. Shipping containers are built to be stacked nine high on a ship with a load capacity of 60,000 lbs. each. On land, they can easily withstand 150-mph winds when used in residential and commercial construction. Bottom line: We meet and exceed all building and safety codes.

NREI: How flood- and wind-resistant are cargo containers?

Leslie Horn: As it applies to flooding, shipping containers are seaworthy and can be built to be airtight. However, with inclement weather, doors and windows can be blown away and broken and you will still have water damage to that extent. The real difference is in 20 years down the road when you have zero rot in the framing because you used the steel containers instead of lumber. Of course, in flood zones, there can be additional precautions to cover windows and doors to prevent flooding through obvious weak points in the home, i.e. windows and doors.

NREI: What are the benefits and drawbacks, if any, of using cargo containers?

Leslie Horn: Benefits include: Built in a fraction of the time and cost. You save 60 percent of the framing cost and cut the time in half for construction. Drawbacks? We don’t know of any; however, [using shipping containers] makes you think more creatively about the architecture of your new home or building.

NREI: Many of the problems with the buildings that flooded during Hurricane Sandy had to do with electrical and other building systems being housed in basements and subbasements. Would the use of cargo containers allow for better infrastructure protection?

Leslie Horn: Yes.

NREI: Could such systems be housed differently and therefore better protected?

Leslie Horn: Yes. Because of the strength and durability of what the containers were originally built for, they inherently offer better infrastructure protection.

NREI: Where are cargo containers being used currently and what are the results so far?

Leslie Horn: Europe and Asia have been successfully using this type of construction for years in both residential and commercial applications. For example, Travel Lodge has already completed three container-construction hotels in Amsterdam, [and there is] Container City in London [a dockland live/work facility completed in five months in 2001].

NREI: Cargo containers have been used in Afghanistan and Iraq on U.S. bases for housing military and humanitarian aid personnel—are they especially protective?

Leslie Horn: Military applications have provided strength and portability. In the U.S. there are approximately 100 single family homes and a few commercial buildings and plans in the works for larger building applications. [Cargo containers] have numerous applications in humanitarian efforts as temporary and permanent housing, transport of goods and commercial pop-ups.

NREI: How easy are the containers to use from both aesthetic and structural standpoints?

Leslie Horn: Aesthetically, it is fun, creative and easy. The challenge is on the technical side. As we move forward with the specialized technology, we are creating systems and patents for all future projects. Currently, we have over $109 million worth of shipping container projects in our pipeline.

NREI: How much could be saved in building costs by using cargo containers?

Leslie Horn: There are significant cost savings upfront in the framing and labor of building and long-term savings due to the systems, energy efficiencies and other green technologies we are deploying.

NREI: Cargo containers are sustainable due to the fact that they are essentially being recycled. But is there anything else about them that’s beneficial to the environment?

Leslie Horn: We are saving trees so we can all live on the planet. We are also cleaning up stockpiled containers.

NREI: What does one get in a container as far as size and materials, and how much are they?

Leslie Horn: Shipping containers are built of steel and wood, and are very standard in size: 10 ft., 20 ft. or 40 ft. long, 8 ft. wide and up to 9.5 ft. tall, and they all come with subflooring intact. The average retired shipping container costs as little as $900; even new ones are rarely more than $6,000. People bring their imagination and determine their own desired results, but the possibilities are endless.

Susan Piperato, National Real Estate Investor