Amazon invests in pre-fab home construction
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 — but an entire house was standing in place of an empty yard.
While not quite a magic trick, the streamlined building process developed by Plant Prefab has drawn the kind of notice most young companies can only dream of — from Amazon.
Last month, Amazon’s Alexa Fund contributed to the Rialtobased start-up’s $6.7-million Series A funding round. The fund promotes the development of applications for its Alexa voiceactivated technology, including “smart homes” that would control all aspects of the residential environment.
It’s a huge business opportunity. With more than 600,000 new homes sold in the U.S. alone last year, there in money to be made by anyone who can get a head start dragging the industry into the tech age.
“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 smartspeaker market, according to one estimate. But pressure from competitors has been growing on the Seattle company. 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, but Plant Prefab has gone upscale with the concept and is focusing on streamlining production for custom homes that can fit on small lots in urban areas.
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 it. 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 50 miles east of Los Angeles, where land and labor costs are lower. The start-up also relies on 35 fulltime employees rather than subcontractors so it can better control the process.
“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.”