PLANT PREFAB MAKES CUSTOM HOUSES FOR URBAN MARKET
Los Angeles: On a mid-september morning, six trucks pulled into an alleyway of Oakland’s fast-gentrifying Golden Gate neighborhood, their oversize load wrapped in white plastic sheets — each truck carrying a piece of Jeff Stone’s prefabricated home.
As the blocks were lifted by a crane and anchored in place by a small crew of construction workers, Stone, an assistant editor at Pixar Animation Studios, his wife, the couple’s friends and neighbors stood watching. Module after module, the red barn house that the Stones had first sketched on a piece of paper a few years back — a nod to Oakland’s farming past — began to take shape.
By the end of the workday, the 1,741-square-foot duplex still needed work. Plumbing, wiring and gas had to be connected, and finish materials had to be applied where the blocks came together. But an entire house was standing in place of an empty backyard.
The residence had been constructed in just a fraction of the time it typically takes for a custom home to be designed and rise from its foundations. And while not quite a magic trick, the streamlined process developed by Plant Prefab has drawn the kind of notice most young companies can only dream of — from Amazon.
Last month, the giant online retailer’s Alexa Fund contributed to the Rialto-based start-up’s $6.7-million Series A funding round. The fund promotes the development of applications for its Alexa voice-activated technology, including “smart homes” that would control all aspects of the residential environment — doorbells, lights and anything else you can imagine.
It’s a huge business opportunity. With more than 600,000 new homes sold in the U.S. alone last year, there are billions of dollars to be made by anyone who can get a head start in dragging the industry into the tech age — something Amazon has accomplished in multiple businesses.
“The industry is ripe for disruption,” said John Burns, an Irvine-based real estate consultant. “There’s a huge competitive advantage for someone who has the capital.”
Ever since introducing its Echo device in 2015, Amazon has dominated the U.S. market for artificial intelligence-powered speakers — the nerve center of an interconnected home. The tech giant controls 70 percent of the smart-speaker market, according to one estimate, with its next-closest competitor, Google, at 24 percent and Apple at 6 percent. But pressure has been growing on the Seattle company.
Earlier this year, Google surpassed Amazon in global smartspeaker sales, according to research firm Canalys. Google and Apple have also announced collaborations with home builders to incorporate Google Assistant and Siri in select residential communities.
To stay competitive, Amazon announced new home appliances and gadgets, including smart clocks and microwaves. Now, its investment in the prefab market is a chance to secure long-term relevance for its devices by influencing the way houses are built.
Prefabricated homes aren’t new. Traditionally, they’ve been associated with trailers and other low-cost accommodation built with cheap materials for people who can’t afford to live anywhere else. Plant Prefab has gone upscale with the concept, and while it isn’t the first to do so, its focus on streamlining production for custom homes that can fit on small lots in urban areas is a promising niche.
It took Plant Prefab less than two months to manufacture the Stones’ Oakland house, and crane operators and contractors worked less than nine hours at the site to install the six components making up the barn. By contrast, it took the average contractor nearly 12 months last year to build a custom home from the ground up, according to government statistics.
To bring down costs, Plant Prefab located its factory in suburban Rialto, 50 miles east of Los Angeles, where land and labor costs are lower. The start-up also relies on 35 full-time employees rather than a number of subcontractors so it can better control the process. The company says it’s able to not only sharply reduce construction times but also shave costs by 10 percent to 25 percent.
“When you’re building in cities, you’re dealing with some of the biggest challenges: higher labor costs, higher land costs and a higher cost of materials,” said Plant Prefab Chief Executive Steve Glenn. “We can’t do much about land and materials, but we can focus on reducing construction times and labor costs.”
Glenn could not comment on the specifics of the Amazon investment but said he’s looking forward to spending some time with the company “to see how to integrate smart technology in homes.”
Companies receiving Alexa funding gain access to several non-monetary services such as development support, marketing assistance and “other resources that help them build successful businesses with Alexa,” according to an Amazon representative, who declined to provide more details.
One of the country’s largest home builders, Lennar Corp., has a partnership with Amazon that could shed light on how Plant Prefab’s collaboration with the tech giant might look.
Earlier this year, a series of Lennar model homes were spruced up with smart speakers, intelligent video doorbells and other gadgets. They were dubbed Amazon Experience Centers, where visitors could interact with Alexa to control TVS, lights, thermostats and shades, and generally test out living in an interconnected home.
David Kaiserman, president of Lennar Ventures, said Amazon approached the home builder after a partnership with Sunnyvale, Calif.-based Ruckus Wireless to develop a wireless home with no dead spots — where devices work seamlessly together and can be controlled via the owner’s voice in Alexa’s natural habitat.
For now, only a select number of Lennar model homes incorporate the wireless technology. Buyers who choose to invest in one receive Alexaenabled products and other smart devices as part of the package.
“The infrastructure is supercritical,” said Kaiserman, who expressed little surprise over Amazon’s investment in Plant Prefab.
“Prefab is a form of technology used across the industry to some extent, and it’s increasingly looked at as we face affordability issues and labor shortages,” he said, noting that Lennar prefabricates roof and wall components.
Other established home builders and start-ups are moving into prefabrication too.
Katerra, a Menlo Park, Calif.based start-up that manufactures modules in factories for its multifamily and commercial buildings, received $865 million this year in a Series D funding round led by the Softbank Vision Fund.