Hope on Alvarado – Shipping Supplies
Los Angeles Business Journal
December 21, 2018
Despite rocky pricing, cargo containers become building mainstay
Using shipping containers for purposes other than shipping goods is not a novel concept, with builders adopting the units as a cheaper and faster alternative to traditional materials in a variety of developments.
Shipping containers have been used in Los Angeles for affordable housing, pop-up restaurants as well as more permanent retail developments.
What started with a few niche projects has now become an entire industry that supplies a growing group of builders and others who repurpose the containers for alternative uses, according to architects and manufacturers.
And Los Angeles would appear to be a prime area for the use of shipping containers with two massive port complexes cycling through millions of the steel boxes each year.
Surprisingly the nearby ports in San Pedro and Long Beach may not be as big of a container supplier for builders as one would think.
“Of all the containers at the port, 99 percent of those are cycling through for trade. Only a small handful retire from service. That’s where we get involved,” said Mike Norton, president of Western Container Sales, which claims to be one of the biggest sellers of shipping containers nationwide.
That was less true in recent years, however, as a glut of shipping containers hit the market in conjunction with the August 2016 Hanjin Shipping Co. Ltd. bankruptcy. The shipping giant’s insolvency resulted in the liquidation of its shipping container inventory, which cut wholesale prices of the containers in half, according to Norton.
As a result, some companies scaled back their inventory and produced fewer containers, he added.
“Two years ago, you couldn’t place a container in the Long Beach area,” Norton said. “Because of the Hanjin collapse, there was a huge influx of containers coming out of circulation.”
But the glut is now fully absorbed, Norton said, and the production cuts mean there are now a shortage of containers causing prices to rise above where they were before the Hanjin bankruptcy.
Building with containers
Michael Bohn, senior principal at Long Beach-based architecture and design firm Studio One Eleven, did his first shipping container project in Santa Ana in 2015.
Studio One Eleven is now working with developer Howard CDM on SteelCraft, a series of food halls. SteelCraft Long Beach opened in 2016. It is home to eight tenants. A location in Bellflower, which will have nine tenants, is expected to open in 2019.
Most vendors come from food trucks, Bohn said. The vendors rent the spaces, which cost less than an entire restaurant but offer a permanent location.
Bohn said most of the containers he uses are sold by brokers in Wilmington, Carson and Paramount.
“The containers that we use have generally been used once or twice and have some dings on them, but that’s part of the character,” Bohn said.
Western Container Sales sells containers that have made only one trip across the ocean. Norton said some are used for more than 10 years before being retired.
Many shipping containers don’t come from ports but from factories where they are manufactured especially for use in construction projects. While this has been the case for a few years, demand has really started to pick up, industry insiders say.
Playa Vista-based KTGY Architecture + Planning is using factory-made shipping containers to address L.A.’s affordable housing shortage. The group is working on Hope on Alvarado, a building in Westlake that will have 84 transitional housing units – a combination of one-bedroom and studio apartments.
Principal Keith Labus said KTGY initially wanted to use repurposed shipping containers but found they didn’t work with the project’s scale. Using factory-built units instead of traditional construction methods will speed up the project by around six months, he said.
This is one of three supportive housing projects KTGY is working on with Aedis Real Estate Group Inc. Four projects with a similar concept are in the works as well.
“Our goal is that this can be applied not only to affordable housing but across the board,” Labus said.
Jennifer Siegal, founder and principal of Venice-based Office of Mobile Design, said modular construction is growing in popularity because of its quick installation and the control it gives builders.
Giant Containers Inc., which has an office in Playa Vista, is a global supplier of fabricated shipping containers.
“The reason for building them from scratch is due to toxicity issues. We would prefer working with a blank slate with no issues,” said Daniel Kroft, the company’s founder and president.
Giant Containers has worked on 20 projects in Los Angeles.
Factory-made shipping containers fall under the category of manufactured housing, which is governed by the state and not the city. An inspection happens in the factory. The city looks at the foundation.
No matter the type, architects agree that a major benefit of shipping containers is how quickly they can be installed.
Bohn said that while contractors are working on containers in a factory, land is leveled and foundations are poured.
Construction time ends up being reduced by 35 to 40 percent, which allows developers to get income sooner, he said.
Once the containers are delivered on site, they can be installed in anywhere from one day to two weeks, Kroft said.
Siegal said you save one-third of your usual construction time with the modular approach because permitting and construction are faster.
“Offsite construction and prefabricated buildings are going to be the way of the future,” Siegal said. “When you think of the way we build now, it’s kind of archaic. We don’t build cars in our garages − it happens in a controlled setting. Why are we building our houses as if technology hasn’t evolved?”
The shipping containers, architects say, are earthquake-safe because each unit is its own, rigid module designed to withstand rocky waters. That, coupled with their low cost and versatility, means shipping containers are here to stay.
“When we first started, I thought this was going to be a trend, and we would ride the wave as long as we could, but I think this is becoming something more permanent,” Kroft said.