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Nearly 60,000 people experience homelessness on a given night in Los Angeles County, a 23% increase from last year.

Developers like Aedis Real Estate Group are devising innovative solutions to house the homeless. Aedis has teamed up with the Los Angeles County Department of Health Services to create Hope on Alvarado in Los Angeles’ Westlake District.

Hope on Alvarado, a four-story apartment complex with 84 studios and one-bedrooms, is the first of a series of Hope projects that uses shipping containers as the main building material.

Los Angeles has been spending too much money on ambulances, emergency care and temporary housing, said Aedis President Scott Baldridge. “These are all inefficient ways to solve this problem.”

Aedis, along with several sponsors, is working with the Foundation for Affordable Housing to provide housing for the chronically homeless (individuals who have been without a home for at least a year).

“The chronically homeless experience a lot of mental health and addiction problems. It’s better for everyone to provide a permanent solution with more support,” said Baldridge.

Aedis will break ground on Hope on Alvarado in early 2018, and construction is expected to last six months. While the industrial aesthetic may be in vogue, reusing locally-sourced shipping containers is also smart economically.

Why shipping containers?

Each of the residential apartments at Hope on Alvarado will use two or three shipping containers. They are modified by removing the doors and portions of the exterior metal and adding floor-to-ceiling windows and other fixtures. Trucks transport the containers to the site, while cranes fit and stack them together into a single building.

“One major advantage of using shipping containers is the dramatic reduction in construction time,” said Mark Oberholzer, associate principal with KTGY Architecture, the firm executing the project.

“We can work on the units while we’re getting all of our permits, entitlements and planning that we need to do,” added Baldridge.

The main cost drivers of construction are land, labor and materials, but this project has more restrictions than the average residential project. There isn’t much flexibility when it came to land, as the county mandates that the building be within half-a-mile from mass transit.

“With these projects, the margin of error is tighter because of limited resources. After exploring a few pre-fabricated options, we decided containers would work well,” he said.

The shift toward pre-fabricated materials
Todd Tomalak, vice president at John Burns Real Estate Consulting, told Yahoo Finance he’s witnessing a shift toward ‘manufactured’ or ‘pre-fabricated’ materials.

“Shipping containers are not widely adopted so far, but it makes economic sense that standard manufacturing processes could be a key driver to lowering costs for housing in general,” he said.

Tomalak shared a few historical examples of how manufactured components speed up the construction process. Doors and windows were not always pre-hung, but most are now because it saves on-site labor costs. Drywall wasn’t popular until after World War II, when labor costs made it too expensive to plaster.

“Time is money, so this makes sense. In many cities, the time horizon to deliver a new multi-family apartment has lengthened substantially,” said Stockton Williams, EVP at the Urban Land Institute.

Processes that once took six to nine months can take up to three years — or even longer. “This imposes substantial costs on the developer that then burdens the renters. Cutting the time to market by up to 50% can shave significant costs,” said Williams.

Blending high-end trends into affordable housing
Trends first emerge among high-income households, followed by the rest of the U.S., according to Tomalak.

Interest in ‘container homes’ has jumped substantially over the past four years, though it has recently leveled off, according to Google searches.