Capital

With Connect Homes' New AZ Plant, Its 3-Line Model Stretches

Connect Homes' building-engineering-and-design as a solution platforms aim at using platform DNA structural and systems pieces and parts for three zones of housing's "unmet need."

Capital

With Connect Homes' New AZ Plant, Its 3-Line Model Stretches

Connect Homes' building-engineering-and-design as a solution platforms aim at using platform DNA structural and systems pieces and parts for three zones of housing's "unmet need."

October 23rd, 2023
With Connect Homes' New AZ Plant, Its 3-Line Model Stretches
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A deeply-constrained housing market obviously needs more capacity. Less obviously, any added capacity needs more capability to self-sustain and, um, last.

This can be either a vicious circle – chasing financial investment – or a virtuous cycle, scaling in step with current resources.

Last week news came across that 10-year old architecture-inspired, technology-powered pre-fabricated homebuilder Connect Homes plans to open a new 150,000 square-foot factory facility in Mesa, AZ, in early 2024, expanding Connect's capacity – it says – by 5,000 square feet of housing each week.

Axios' succinct summation of the announcement highlights these points:

Why it matters: Arizona — and the country — is grappling with a severe housing shortage and Connect Homes says it can manufacture and install its product in half the time of traditional construction.

How it works: The company offers 15 single-family models ranging from a 320-square-foot ADU to a 3,200-square-foot four-bedroom, two-story home.

  • It takes about one year to design, manufacture, secure government approvals and install one of Connect Homes products, CEO Deborah Casper tells Axios.
  • Prices range from about $208,500 to $1.23 million, according to the company's website.

Also noted in Connect Homes' press statement, the new Mesa facility would be about triple the size of the current Connect Homes factory in San Bernadino, CA, and will be staffed by 90 or more team members, ranging from line managers to varying skilled and semi-skilled manufacturing front-liners.

Connect's building-engineering-and-design as a solution platforms aim at using platform DNA structural and systems pieces and parts for three distinct zones of housing's "unmet need:" at the high-end market rate single-family semi custom tier, the attached single-family build-to-rent tier BTR developers and investors are looking for, and homeless provisional housing.

In a Linked-In post, Connect Homes ceo Deborah Casper's take on the unmet need the new facility will address comes through:

Maricopa County, Arizona has been among the fastest-growing counties in the nation for a decade, however the Greater Phoenix area has not been adding enough new housing to meet the urgent need for homes at all levels of the market. Experts estimate the housing shortfall to be around 49,000 units. Connect Homes’ portfolio of housing options for single family buyers, developers, and governments is part of the solution to alleviating the acute housing shortage gripping Greater Phoenix and much of the country. Our new factory, capable of manufacturing up to 5,000 square feet of housing per week, will quickly add beautiful, high-quality homes to the housing stock in half the time and cost less than traditional site-built construction."

When Casper – who rose to chief executive from CFO after the departure of former ceo Greg Leung, who'd come out of the ranks of Apple – considers the double-bind of capacity and capability she sees them as inter-depending,

The decision to open up a second factory was a unanimous decision of the board that, quite frankly, was really past due," says Casper. "We really should have considered this at a sooner point in time, both from a strategic operational standpoint, never mind business and profitability. The San Bernardino factory – because of its size and capacity – limits the potential revenue and, of course, profit that the company can generate. We are busting at the seams essentially right now and we're kind of at the cap of how much revenue and how much product can we put through that factory.
Opening up the second factory with its own three lines. And so, combined with San Bernadino, we would have four manufacturing lines as opposed to one. We would be able to quadruple our growth, revenue and be able to deliver more of our three product lines to neighboring states. That sets the company up for success. You know, we're always speaking with strategic partners and potential investors that want to invest in and the demand and the interest is very high.
The next phase of our growth will be 'how do we start to add-in additional automations in the factory?' Then we'd be able to manufacture at a faster pace. That sets us up for success, and we have the full support of our investor base and our board."

A secret-sauce element of Connect Homes' business, operational, and manufacturing model – a critical facet of the enterprise's circular challenge and opportunity dynamic of the need to scale to profit, and the need to show demonstrable profit to sustain traction on the investment and lending front – is a solution for its three separate "customer" bases: individuals, developers, and state and local authorities needing homes to house the un-homed.

What's so exciting about the Connect shelters product is that it's built on the same platform as our modern green beautiful homes," says Gordon Stott, co- founder and chief architect at Connect Homes. "The shelter product and the Pro product really share virtually all the DNA of what goes into a high quality Connect home such as a patented all-steel frame, the same high quality commercial window package, etc. It's really exciting to be having a prefab platform that's so flexible, that it can serve these really disparate ends of the housing spectrum. We are quite literally building for some of the most fortunate people on Earth. And then the very next module down the assembly line is for someone experiencing homelessness."

According to the press statement, Connect Homes’ ability to oversee all aspects of the manufacturing and home delivery process enabled it to quickly design, build, and deploy non-congregate homeless housing solutions across California as part of Project Homekey, a statewide effort to sustain and rapidly expand housing for persons experiencing homelessness. As part of Project Homekey, Connect is partnering with cities to deploy modular homes in Mountain View, Long Beach and Victorville, California.

The production model's agile handling of pivoting from high-end semi-custom, to developer-level scale, to homeless shelter outputs means that opportunity to scale the business comes with a hitch: it has to extend the diverse offerings into other geographies, given the range limits of the California facility.

When we look at the total pipeline, our backlog is pretty evenly spread amongst demand across all three lines," says Casper. "That's a key component of Connect Homes, to make sure that we diversify and we're able to, to focus on these different areas. One of the areas that we want to focus on more in 2024 is the shelter side and the developer side, and try to grow our network outside of the state of California into neighboring states. Arizona and Nevada, for example, have a lot more area of open land that folks are trying to build. The potential for the single family home line or developer or designer series will will continue to grow as we expand outside of California. We're not necessarily focusing more on one line versus the other. We're just keeping the conversations growing and the shelter side doesn't seem like it's going to slow down anytime soon."

In Gordon Stott's view Connect Homes' capacity and capability are virtually interchangeable.

Our production facilities are really at the heart of what we do," says Stott. "Even though we are scattered geographically, just symbolically gathering the company around these production facilities – the place where we create something that's so special for the clients. We we control the process from end to end and we deliver and install what we do build in the factory. Understanding how unique that is in our industry, but also how much it all comes back to the actual pure manufacturing of the product is who we are."

Now, those facilities – enlarged and expanded – have added capacity. The next question, regarding capability, will be Connect Homes' staying power on the growth curve.

ABOUT THE AUTHOR

John McManus

John McManus

President and Founder

John McManus, founder and president of The Builder’s Daily, is an award-winning editorial, programming, and digital content strategist. TBD's purpose is a community capable of constant improvement.

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