From Atlanta Business Chronicle - by Lisa R. Schoolcraft
A Roswell-based company is entering the Atlanta home-building market by thinking inside the box.
New World Home LLC plans to construct modular homes, which are manufactured at a plant in Savannah and put together on site in Atlanta. The first home was expected to begin construction Nov. 12 at Sewell Mill and Murdock roads in Roswell.
Atlanta is the first — and test — market for New World Home, which hopes to expand further into the Southeast, said Michael A. Natbony, CEO.
An unnamed New York-based private equity firm has committed more than $3.5 million to the startup of the Atlanta operation.
“We think this is an exit strategy for people who are sitting on land,” said Steven R. Fader, chief operating officer of New World Home of Atlanta LLC, a division of New World Home. New World Home will reach out to banks, developers and home builders sitting on vacant lots, he said.
Metro Atlanta has traditionally been a speculative housing market, meaning builders erect homes and wait for potential buyers. During the strong housing market, builders quickly sold standing inventory of new homes and bought up lots for future development.
Today, builders are trying to pare down new-home inventory and divest themselves of surplus lots as sales have slid.
Speculative housing in metro Atlanta “will be dead for a while,” Fader said.
So for buyers who want to move into a new home quickly, modular homes are the answer, he said.
A modular home, unlike a “stick-built” home, which is erected on site from raw materials, is custom-built in components at the factory, then delivered to the site. A modular home takes just six to eight weeks to assemble on site, whereas a stick-built home can take six to 12 months to build.
With the private equity funding, “we don’t have bank financing bearing down on us right now,” Fader said.
Modular homes, or industrialized homes as they are called in Georgia zoning, have been slow to catch on in the state, according to Fred Hallahan, president of Hallahan Associates, a Baltimore-based consulting firm to the modular housing industry.
Modular homes represent about 1 percent of the home-building industry in Georgia, he said.
One of the main reasons that stick-built homes are more popular in Georgia is its construction is relatively inexpensive compared with the rest of the country, Hallahan said.
Georgia, and most of the Southeast, can also build 12 months of the year, unlike colder regions of the country, he said.
Modular homes are more popular in areas where construction costs are higher and weather affects construction, such as Pennsylvania and New York, Hallahan said.
“That doesn’t mean that modular housing cannot grow above the 1 percent range in Georgia,” he said. “There is tremendous potential for modular growth.”
Grant Smereczynsky, managing member and CEO of Building Systems Network LLC in Gainesville, has been building modular homes in metro Atlanta for 12 years.
“The product is extremely misunderstood,” he said. “When you say modular home, you are probably thinking about mobile homes, but it compares to a stick-built house.”
Modular homes are usually built above building codes and are extremely energy-efficient, Smereczynsky said. “Modular was green before green was cool.”
A modular home can be made with any number of modules, Smereczynsky said. “You can make it a mansion.”
That means modular homes can run the gamut on price points.
New World Home plans to build its first home in the mid-$600,000 range, Natbony said. “But we are developing lines of homes that will meet modest-priced homes.”
New World Homes expects to offer 20 different designs by early next year, with prices ranging from the low $300,000s on up, he said.
Smereczynsky expects the modular home industry will have a boom in Georgia in the next five years or less, “because there has been a cleansing of the building industry and some of the stronger builders will recognize the value of modular homes.”