Blokable has set its sights on fixing what its leaders deem a broken U.S. housing market.
The Seattle startup pulled back the veil on a model it has been quietly developing for years that aims to transform how housing is built. For most of its history, the signature public-facing element of Blokable was its Bloks, manufactured smart housing units that come together to build inexpensive but high-quality complexes. But Bloks are just the appetizer, Blokable’s leaders said in an interview with GeekWire, and the main course is its model to provide “housing development as a service,” that seeks to dramatically lower the cost of building and ensure everyone has access to a home.
Blokable pitches the service as “turnkey” for market-rate and non-profit developers, as well as housing trusts and other organizations that build housing. Blokable handles the entire process, teaming up with architect and general contractor partners that work from a standardized baseline created by the company. Blokable’s formula can be easily repeated from project to project rather than having to build from scratch each time, cutting down on design and engineering time and saving money.
In real estate terms, Blokable’s service includes elements of a modular housing builder, a design-build firm and a fee developer that builds for others without owning the land. But the company says its model has never been done before and has the potential to dramatically lower costs to build housing, specifically affordable housing, and provide people with new paths to homeownership.
“We wanted to find a model where the use of capitalism could create a thing that creates wealth in the people who buy it,” said Nelson Del Rio, one of Blokable’s co-CEOs. “We are creating a manufacturing model to disintermediate the traditional capitalism and housing development stack.”
Blokable, which raised close to $5 million last year, landing Paul Allen’s Vulcan as an investor, is raising cash again to continue its mission of fixing the housing market. A filing with the U.S. Securities and Exchange Commission shows Blokable is seeking to raise about $5 million and has landed most of that.
The 22-person company manufactures its units in a facility in Vancouver, Wash. The units are made of steel frames instead of the wood frames typically found in many modular projects. That makes it easier to rapidly transport and install Bloks on site and arrange them into larger units or create multi-unit housing complexes.
The bones of Blokable units are standardized. Everything else — like doors, windows and fixtures — is customizable. Blokable wants each of its projects to fit in and raise the profile and prosperity of the neighborhoods it builds in.
Built into every unit is a smart monitoring system called BlokSense meant to reduce operating, maintenance and insurance costs by keeping tabs on air quality, humidity and alerting owners when something needs fixing.
“We’ve been very intentional about setting the company up, creating the right foundation, getting the right investors involved, creating the right manufacturing capacity, developing a product first, getting the quality there, finding the right sites to work on,” Aaron Holm, Blokable co-CEO said. “None of it has been about trying to deal the with the market as it is, it’s all been about developing an entirely new approach.”
Holm is a former product manager at Amazon who worked on the tech giant’s physical retail push, including bookstores and the checkout-free Amazon Go convenience concept. Del Rio has advised the company for two years and joined Holm as co-CEO earlier this year. Del Rio pioneered public-private partnerships for handling government-occupied commercial buildings that brought together government entities, nonprofits and commercial developers.
Blokable wants to take these kinds of partnerships a step further. It is getting ready to install its first units in the Seattle suburb of Edmonds, Wash., next month. The units will be “graduated housing,” managed by Seattle-based Compass Housing Alliance, for formerly homeless people who are ready to move on from the shelter system but need a permanent place. Holm said this kind of housing is a missing piece in the push to get homeless people off the street and into homes, and without it, the system doesn’t work.
“The issue is as people stabilize, there is no permanent housing to move into in the market,” Holm said. “Shelters are a bandaid, and the only solution is to build permanent housing so that everybody has housing … There are a lot of people in the shelter system who are earning enough money to pay rent in a reasonable system, but there is nowhere to go, and so the whole shelter system is just ballooning.”
Affordable housing developers today have to navigate a variety of programs for funding affordable housing, an intricate interplay between non-profits and several levels of government with complex funding mechanisms.
The company is working on a project in Auburn, Wash. that it says it is building for $125,000 per unit. Compare that to a recent project in Seattle that was built for $300,000 per unit and several recent projects in the San Francisco area with price tags upwards of $800,000 per unit.
Blokable also has projects in Vancouver, Wash., the San Francisco Bay Area, Los Angeles, New York City, and Eden, Utah. Blokable is mostly focused on affordable housing right now, but its model can service all parts of the housing spectrum.
As it completes its first projects, Blokable already has its sights set on another goal: homeownership. It is working on an ownership model that gives people of moderate to low income the ability to own their units rather than using resources to subsidize rents.
“We love that there is political momentum, and there’s concern and awareness, but there has to be further recognition that people deserve to be treated like humans, and live in a good home, not sub par,” Del Rio said. “And it should be a structure that enhances their equity.”