The Future of Affordable Housing Development at Virginia Street Studios

In a precarious time of rising construction costs, material scarcity and labor shortages, it is perhaps the best course of action to turn away from the traditional model of housing development and construction in favor of something new. And that is exactly what the Pacific Companies has elected to do in their new affordable housing development serving seniors in San Jose, CA. By utilizing the latest in automated technologies, Virginia Street Studios represents much more than the homes it will provide to seniors in Northern California. It also represents a bold new vision in the construction of housing across the country; one that is not reliant on the standard processes of construction and development.


Designed by The Pacific Companies (TPC) and USA Properties Fund, Inc. (USAP), Virginia Street Studios will offer affordable homes for seniors in San Jose, California, a booming tech city with some of the highest costs of living in the United States. The new construction development boasts nearly 300 affordable homes in addition to community spaces and amenities, making it a secure and affordable site for not just living – but thriving. Although this is enough cause for recognition and celebration on its own, this development is particularly notable for its innovative construction. Virginia Street Studios is a modular development, meaning that the units themselves were constructed in a factory setting using a combination of a smaller but skilled labor force, robotics, and automated technology. Once completed, these modular units are placed at the site of the development having already been fabricated offsite. The innovation inherent to this community doesn’t stop there, as it is being built in the world’s first automated volumetric construction factory located in Nampa, Idaho, Autovol Inc.


“This was the first project constructed by our newly-opened modular manufacturing facility, and I couldn’t be more satisfied with the results that the team was able to produce” said TPC’s Caleb Roope. “We saved approximately $80 per square foot over conventional construction methods and shaved nearly 8 months off of the estimated time to build while at the same time delivering superior quality due in part to the controlled factory construction environment and the precision of automation.”


This distinction from traditional construction is an important one, as it represents a variety of benefits for both those constructing the development, and those who will live in it once completed. One of the most impactful advantages of modular construction is its efficiency and speed; according to management consultant McKinsey & Company, a modular approach offers 20-50% faster construction schedules. The positive impact of this is twofold: first, it means that those in need of housing in a certain area need not wait for long timelines of new builds following the traditional model; also, developers and contractors can complete more affordable housing options at a faster rate. This is key, as costs fall dramatically as a result of fewer costly delays and shorter labor windows. In an industry where time truly is money, this is an important distinction.

Another advantage of the modular model is relative to a given region’s labor supply and housing demand. In other words, modular construction makes the most sense in areas where the traditional construction labor force is low, while the demand for housing is high. McKinsey & Company cites the West Coast of the United States as a prime example of this intersection. This is especially relevant in the Silicon Valley region, where tech jobs have created both an intense desire for accessible housing and a decrease in traditional labor jobs. In this way, TPC and their partners recognized a significant gap in the affordable housing market of this region and utilized innovative construction practices to supply it in the form of Virginia Street Studios.


“Virginia Street demonstrates the creativity, innovation and problem solving abilities of our industry as we try and address the ever growing affordable housing crisis, “said CREA’s Brad Bullock, Managing Director, Originations.

Of course, the manner in which this development was constructed only tells part of the story. The most significant benefit of affordable housing, no matter how it is developed, is the impact that it has on people in need. And in the case of seniors in California, the need is significant. According to Justice in Aging, an organization which advocates for low-income older adults, “older adults represent the fastest growing age group of the homeless population in California [due to] unsustainable rent burdens and an inadequate supply of affordable, accessible, and stable housing.” Further, Black seniors in the state represent 31% of those accessing homeless services, despite making up only 5.6% of the population. It is abundantly clear that seniors in California face an affordable housing crisis, and developments like Virginia Street Studios are helping them to face it head on.


Besides offering secure housing at an affordable rate, Virginia Street Studios also constitutes a community hub for those who will call it home by ensuring that there are a total of four shared community spaces throughout the development to host a variety of activities and events for residents. In addition, the entire facility is ADA (Americans with Disabilities Act) compliant and will be equipped with modern appliances, amenities and features for all to enjoy. These are to include the following:

  1. Fitness areas, including a dance studio

  2. Rooftop deck

  3. Craft space

  4. Barbecue areas with outdoor seating and dining space

  5. Multiple laundry facilities

“CREA is always happy to support developments that improve and innovate processes so that everyone, from investors to residents, can feel the benefits,” Jamie Irwin, Managing Director Account Management. “The team at TPC is consistent in their ability to do just that, and we’re always proud to partner with them on groundbreaking affordable housing solutions.”


Virginia Street Studios is a progressive, future-facing initiative that delivers multiple tangible benefits to the community it will take root in. On one hand, it continues the important commitment to affordable housing solutions that CREA is so proud to support with a state-of-the-art development designed for seniors in an area of great need. On the other, it provides a concrete example for the modern, flexible and highly efficient model of modular construction during a time of economic disruption. This bold new step would not be possible without the financial backing of investors like Comerica Bank, California Bank & Trust and Ally Bank, whose investments in community development are helping build homes across the country.


“Comerica’s commitment to strengthening our communities spans more than 170 years, and through our community development efforts we strive to create positive change,” said Comerica Bank Director of Community Development Lending Beatrice Kelly. “It is an honor to be involved in the financing and support of innovative communities like Virginia Street Studios, and there is no doubt that CREA’s continued partnerships with The Pacific Companies and Comerica alike will support our vision of affordable housing everyone can be proud of.”

 

Financial Support & Partnership: In addition to $41.4MM in low-income tax credit (LIHTC) equity provided through CREA Corporate Tax Credit Funds 79 and 80 with support from Comerica Bank, California Bank & Trust and Ally Bank. California Bank & Trust also originated the Series A Bond financing with an $85MM commitment and was instrumental in the financing of the Autovol, Inc. factory. Bonneville Affordable Housing Capital, LLC also provided $20MM in Series B Bonds.