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“Cost per square foot” to build doesn’t take into account land acquisition costs? Some of the “economies of scale” the author is discussing accrue to whoever in the development partnership contributes land. If a piece of land can support the development of 250 apartments, it is worth a lot more than the same piece of land used for a few single family houses. But, per unit the land cost is still a lot lower for the apartments in a dense area than the single family houses in the sparse area. So it could be cheaper to build lots of apartments, but the owner of the land takes that potential savings as profit (often contributing the dollar value of the land into the dev partnership for a share of the project equity). The other thing to consider is that multi-unit apartment buildings are exactly that: a multiplication of costs driven on a per-unit basis. Every unit needs a bathroom and kitchen, the most expensive part of any dwelling. Actually per square foot studios are the most expensive to build and larger apartments are cheaper. Airplane hangars are cheap per square foot. Look at college dorms or Eastern Bloc communal apartments for an example of how resource-constrained institutions delivered inexpensive housing to large numbers of people while benefitting from economies of scale: amortize the high costs of the expensive parts of a building (kitchens, bathrooms) by sharing them between users who get private access to cheaper building features (bedrooms). Final thing is that buildings are hard to manufacture off site because, well, to put it in stupid terms: they are very big and heavy, and you never really know whether something will work on site until it’s done on site. So each construction site is a purpose-built “building factory” for one building with all the affiliated capital costs, mobilization costs, etc. There is an economy of scale, but it’s in the manufacturing of things that laborers can work with - tools, standardized wood sizes and hardware, bricks, tiles, flooring, screws, nails, etc. |
(There was a bit of a movement to turn literal shipping containers into rooms or tiny homes, but it turns out it’s quite expensive to modify something that wasn’t supposed to be anything other than a box to have things like windows and doors and plumbing, to say nothing of whatever remediation would be required of the container’s previous life.)