Experts Can't Agree On If Affordable Housing From Shipping Containers Is Great Or Awful

Images of steel shipping containers interlinked at the seams, creating what looks like a beehive for humans, started capturing the real estate community's attention a decade ago.

For a few years starting in about 2010, shipping container commercial real estate projects were all the rage, with restaurants, retail, gyms, student housing and more constructed from shipping containers, oozing a cool "less is more" aesthetic.

Some architects and developers leaped on the construction method as an option to quickly and cheaply build affordable housing.

"I have worked on shipping container homes for the last four years," Dreien Opportunity Partners CEO and Dallas developer Sam Ware said. "It's the best value out there for micro houses, apartments, student housing, homeless housing and affordable housing that should be built in the blighted opportunity zones." 

But others say the method is being overused or misused and say shipping containers' strength as an affordable alternative to traditional construction has been blown out of proportion. 

"The existence of tiny homes in general and the use of shipping containers can be instrumental in getting people housed. So for people experiencing unhoused homelessness, [such as] living in encampments on the streets or in tents, or in and out of shelters day-by-day, these can be fundamental as a stepping stone," Poverty to Prosperity Program at Center for American Progress senior policy analyst Jaboa Lake said.

"But too often they are treated as the solution, and it is clearly not a solution.”

There is great need for more affordable housing in the U.S. — roughly 567,000 people are homeless in the U.S. and 7.7 million low-income renters are paying more than half of their income on housing, according to the National Low Income Housing Coalition. 

Building with shipping containers can be a way to get product built faster and cheaper than traditional methods.

From his own studies, Ware said buying a used container without delivery to a site costs anywhere from $1,300 to $5K, but that cost goes up indefinitely when trying to modify containers for single or multifamily housing. Ware has seen bids for finishing out a single container with one bedroom, one bathroom, a kitchen and a living room in the $15K to $35K range. He said no other method of building housing provides that kind of value.

But how cheap a shipping container project turns out depends on what you put in it and whether its steel frame has to be reinforced to install windows, plumbing and other utilities and features. 

"Living in it, you will need insulation since you can't just have a metal wall," KTGY Architecture + Planning Associate principal Mark Oberholzer said. "You also have to build a wall inside with sheetrock on it just to make it livable, and then run all the services."

The cost of a container build-out can be in the $150 to $185 per SF range just for the module itself, not including the cost of connecting everything to the site, Oberholzer estimated. Total construction costs for traditional apartments are in the $64.5K to $86K per unit range, according to construction publication Commercial Construction & Renovation. At the low end of this range, a 500 SF traditional apartment has a cost of $129 per SF, while at the higher end, the same size apartment would take $172 per SF to build out.

So far, the Los Angeles-based architect has seen the concept used primarily in high-end housing development where owners seek a sleek, luxury design using old containers. California homeless or transitional housing projects, built with state and federal support, also have used containers when quick modular build-outs with lower labor costs are needed. 

But when it comes to mid-tier housing, the designs and benefits of shipping containers are not necessarily a better or cheaper solution when compared to traditional housing construction methods, he said. 

Architect Jennifer Picquet-Reyes with Merriman Anderson/Architects said her firm's first real stab at repurposing shipping containers into apartments came when nonprofit CitySquare Housing asked her firm to design a series of affordable one-bedroom units from repurposed shipping containers on Malcolm X Boulevard in South Dallas, known as the Lomax Container Housing Project. 

"I would say that over the years, we have looked at the shipping containers in the retail and restaurant space a couple of different times in South Dallas and in McKinney [north of Dallas], but we have not actually built any of those projects," Picquet-Reyes said. 

Merriman Anderson released plans for its series of interlinked 300 SF apartment units on Malcolm X this year and expects to open the project next year. But even with some cost savings on labor, Picquet-Reyes said shipping container construction comes with many moving parts and challenges of its own. 

"It’s very technical trying to figure out how it all fits together and to achieve the code requirements for multifamily. The other thing that we focus on primarily is not cutting holes in the sides of the container because what makes it useful is the structure, and when you start cutting holes in it, you have to reinforce that which adds more cost because you have to add structure," Picquet-Reyes said.

KTGY architect and associate Marissa Kasdan said shipping containers' role in designing real estate is much more nuanced than news reports may suggest. She sees container development as just one option among other construction methods in trying to get housing closer to affordability. But whether affordability factors in depends on the project, the design and the players involved.  

"I think there is a time and a place for shipping containers, a time and a place for mass timber and for 3D printing, and that those different technologies are going to ebb and flow through time," Kasdan said. 

"But, I don't think there is going to be one [solution] where it's going to solve all of our problems."

Lake is more critical. She believes shipping containers can threaten the established order of housing development and can give the veneer of offering a permanent solution to the housing crisis without providing actual long-term stability. 

"It’s not a long-term solution and that is what gets at the core of it," Lake said. "They are not meant to be permanent housing, so they are not going to get a lot of support from places like the U.S. Department of Housing and Urban Development, which prioritizes affordable housing solutions in a lot of their funding."

The average shipping container home has a life cycle of 25 years, with some possibility of extending it with maintenance and improved exterior siding, according to Rise, an online publication covering the sustainable home improvement space. 

For Lake, this is not enough to push struggling Americans toward long-term homeownership. 

"So when it comes to tiny homes and things like that, it provides a little space for 'for-profit' developers to come in and capitalize on not actually solving a problem and kind of almost delegitimizing the need for permanent housing solutions and investments there."