Modular ‘Lego’ project by Sabot Development in San Marcos looks to disrupt student housing – Austin Business Journal

An Austin company wants to disrupt the business of student housing with a technique it says can cut construction costs by 20 percent and allow it to build an apartment complex in less than a year.

Jim Young of Sabot Development is partnering with Warren Hayes of Hayes Modular Group to build what they claim is the first multi-story steel, modular apartment complex in Texas.

They broke ground in late January on a 175-unit complex at 401 South Guadalupe St. in San Marcos, across the street from the popular music venue Cheatham Street Warehouse. The $22 million project, called Cheatham Flats, will house 234 beds in a mixed-use, urban development about a mile from Texas State University, south of Austin on I-35.

“The method of construction we’re using is going to be extremely impactful on affordable housing and workforce housing in Central Texas. We’re going to make sure of it,” Young said.

Contractors with Stone Development have started on the apartment complex’s 176-space parking garage. Meanwhile, 840 miles away, another crew of workers with Zekelman Industries is producing the modular units in Birmingham, Alabama.

Made with American steel, the 11-feet tall by 36-feet long units will be fully furnished, then wrapped in a weather-resistant casing and shipped to San Marcos.

The “volumetric boxes” will be assembled on site like a stack of Legos, said Young.

Manufacturing the units off-site will allow Sabot Development to streamline production, reduce energy costs by 15 percent and better manage quality, Young and Hayes said.

“You got to think about building a building… it’s the most inefficient thing you can do when you build it on one piece of property. It’s like building your car in the front yard instead building it in a factory,” Young said.

Currently, Hayes said they can build the steel modular units off-site for the same price as wood modular units. Once they refine production, he said costs could fall even further.

Cheatham Flats is poised to tap into the burgeoning student population in San Marcos. Texas State University had seen 19 consecutive years of enrollment growth, until this fall when total enrollment was relatively flat at 38,694 students. However, last fall, the university had its largest freshman class on record with 5,875 students, according to the college.

Construction is booming around campus. The university has about $700 million worth of planned upgrades to school buildings and residence halls. University President Denise Trauth told ABJ in November that the goal is to have all freshman and a third of sophomores living on campus.

But tight student housing supply means private projects will have to fill in the gap as enrollment swells, Young said. Unlike Cheatham Flats, most of the affordable units for students are east of I-35, on the opposite side of town from the university, he said

Although rental rates aren’t solidified, Cheatham Flats most likely charge about $750 to $1,100 per a student, which would include rent, utilities, internet, cable and furnishings.

The complex will have 187,000 square feet of housing and parking, plus 5,000 square feet of retail space for a coffee bar, restaurants and potentially dry cleaning and tutoring services.

Hayes has a long career in building dormitories, apartment complexes, military barracks, hotels and temporary workforce housing for the energy sector. Seattle-based Synergy Construction, which has experience in permanent modular housing, will advise the group. Gary Bellomy of Land Design Studio is the project manager and Darrell Windham with the law firm Dickinson Wright is the group’s attorney.

Young said Cheatham Flats hopes to be leasing to students by January 2019.

“It’s not often you talk about the word technology when you talk about construction,” Young said. “We can build (a complex) in less than 365 days. [Hayes] has done one even faster. That’s why we like to call it a disruptive technology. It’s not just cool because we’re building big metal boxes.”

The List: Austin-area multifamily development firms

Ranked by Austin area: No. of multifamily units under development or delivered in 2017

Rank Business name Austin area: No. of multifamily units under development or delivered in 2017 1 Oden Hughes LLC 1,315 2 Journeyman Group 1,278 3 Aspen Heights Partners 882 View This List

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