Developed and financed through an innovative partnership between Blokable and the State of Washington, Blokable at Phoenix Rising is an all-electric permanent housing community in Auburn, Washington, and the world's first Vertically Integrated Modular (VIM) housing development. The project was developed on a site owned by Valley Cities Behavioral Health Care who will rent the units to residents earning 30% to 50% of the Area Median Income (AMI). The project comprises two buildings with five studios and seven one-bedroom apartments. The buildings feature a state-of-the-art steel structural system for seismic integrity and independent energy recovery ventilation that maximizes energy efficiency and lowers utility costs. Blokable delivered the project on a Guaranteed Maximum (GMAX) contract to Valley Cities at a cost of $1.5M. The full project cost to the State of Washington was $125,000 per door, less than half the Seattle area's average cost per door, in a region that faces a severe shortage of affordable housing.

Pioneered by Blokable, Vertically Integrated Modular (VIM) development brings manufacturing innovation to the housing sector for the specific purpose of broadening housing access and affordability. VIM enabled Blokable to drive innovation throughout the design, planning, financing, permitting, manufacturing, delivery, and final assembly of Phoenix Rising. After establishing the development site and project cost through a partnership with Valley Cities Behavioral Health Center, Blokable arranged the financing from the state, secured the entitlements and conditional use permit with the city, and ultimately delivered the entire project on a zero-risk contract to Valley Cities. Along with no risk to Valley Cities, the project cost did not exceed the amount approved by Washington State.

Blokable at Phoenix Rising embodies new standards in aesthetics and quality for multi-family housing, where long-term durability, low maintenance and operating costs, zero energy-readiness, and indoor airPLUS are standard in every building. The interior of each unit features antimicrobial surfaces, a sound attenuated living space, dimmable cove lighting, and an energy recovery ventilation system. Phoenix Rising incorporated ramps to each doorstep to ensure accessibility to all future residents, as well as fresh landscaping that ties this development to the surrounding community and scenic beauty of King County.

When developing Phoenix Rising, Blokable sought to connect the dots between energy efficiency and housing affordability. Each unit uses an energy recovery ventilation system allowing the facility to cost 60% less for heating and cooling, and 30% less for overall utilities while simultaneously creating a continually fresh environment that helps mitigate any bacteria, molds and other unhealthy air particles that might be in the air. Not only does this create a safe and healthy living environment, but it will also provide its low-income residents with utility cost-savings and housing stability for years to come.

Blokable at Phoenix Rising highlights the company's mission to reduce cost and risk for government, leverage private financing for innovation that increases efficiency and reduces costs, simplify the funding process, lower operating costs, and rapidly develop more housing for communities in need.

The U.S. faces a shortage of 3.3 million homes, increasing by 300,000 each year that homebuilding lags (Freddie Mac, 2020). Meanwhile, housing itself is becoming a luxury good. Home prices are up 10.8% as first-time buyers face more barriers than ever (WSJ, 2021). The rental market is building more luxury units while middle-to-lower income families have fewer options (Harvard's Joint Center for Housing Studies, 2020).

The answer is to build more housing at a lower cost per door. But according to a 2020 survey by the National Multifamily Housing Council, housing is more expensive than ever to build. Costs are rising for all types of construction; 36% of respondents said they have been impacted by lack of materials and 57% reported construction delays.

These obstacles are stacked onto an already fragmented housing market that's split between affordable and market rate housing development. These two markets may operate differently within their respective sectors; affordable housing which relies on government subsidy to produce housing that is attainable at below-market rent and market-rate housing which is financed by the promise of future renters paying full price. Despite the two contrasting methods of financing development, both ultimately represent the same value of equity that's created when housing and land are put together to create real estate.

Throughout traditional real estate development, the stakeholders who benefit from real estate equity created are architects, developers, financial institutions, contractors, and others who all compete to maximize profit and minimize risk in housing creation. This competition leaves no room for innovation as all parties involved seek to build at the lowest cost while pocketing savings accrued in the development process. This makes affordable housing actually more expensive to produce than market rate because the developer must pay additional costs associated with obtaining public subsidies and managing legal and financial compliance. Amid soaring demand in growing urban areas, per-door build costs for affordable apartments now range from $500K to $1M. Even as state governments, such as Washington State, spend hundreds of millions of dollars to address the affordable housing shortage, it typically takes 5 to 10 years for a not-for-profit project to get built. With a housing industry that lacks an incentive to innovate and become more efficient, housing never actually becomes less expensive to build and affordable housing production continues to stagnate. The cost of development will only continue to increase as demand increases unless the industry embraces a new paradigm in housing development.

Blokable's answer is to own the entire development process under their Vertically Integrated Modular model. Built on the foundation of industrialization that has delivered quantum changes for markets such as automotive, aviation, and aerospace, VIM is designed to revolutionize housing development through new standards in quality and efficiency that allows housing to be completed at lower costs than conventionally built affordable housing. Industrialization works when the timing is right and it is technically feasible to bring together product standardization and repeatable production to deliver a new product to an underserved market at scale. The housing industry has reached the perfect moment to industrialize housing development, but to do so they must go beyond the manufacturing and business approaches that have revolutionized the automotive, aviation, and aerospace industries, because unlike those products, permanent housing is tied to the ultimate appreciating asset, land.

The output of VIM's efficiency is equity – the currency of real estate development and the unique characteristic of a product that is legally attached to land. Once Blokable's innovative housing product is paired with the dirt or land on a development site, it becomes real estate and creates real estate equity. To unleash innovation in the undersupplied housing market, Blokable's business model disintermediates the currently fragmented process of development and ownership by vertically integrating the entire housing development process and controlling all equity created.

This highly efficient structure disintermediates the traditional development process on both the market-rate and affordable housing side by applying innovation to generate new equity that reduces the need for subsidies and creates new opportunities for investor returns, project financing, and community development and ownership. Because the VIM process is standardized, any new efficiencies gained can be transferred to the next project to lower development costs. Blokable's vision is to convert continuous innovation into greater real estate equity -- providing higher returns to market rate real estate investors and lower-cost affordable housing that sets new standards for quality and efficiency.

Applying innovation to create new equity creates new opportunities for investor returns, project financing, and community development and ownership. Creating new equity breaks the decades-old stalemate, in which build costs are forever escalating in markets where more and more housing is needed. Adding more money does not solve the problem, but rather further drives up the cost of an already scarce resource, which is the ability to build permanent housing.

A key component of Blokable's VIM development platform is its proprietary Building System, which is designed to consistently produce high-quality, low-cost, connected housing. Each volumetric "Blok" is standardized to solve the problems of housing development, meaning they're engineered to meet the strictest building codes across the country and can be stacked, combined, and connected in multiple housing configurations for endless development opportunities. By manufacturing 90% of the building in the factory, Blokable can slash project time and costs, and drive continuous improvements in energy efficiency and building performance. The Blokable Building System is designed to be a canvas for architects, offering them maximum flexibility and creativity in design. Once delivered and assembled on-site, Blokable buildings can accommodate an extensive variety of high-quality materials and finishes, giving owners a choice in aesthetics.

Blokable is developing housing for the "missing middle" -- expansive regions where neither single-family homes nor luxury high-rises make economic sense for communities. Even before COVID-19, housing insecurity affected a large number of Americans. Lower-income households bear a disproportionate burden; for every 100 extremely low-income households, there are only 36 affordable rental homes. Nearly 90% of extremely low-income households are considered "cost-burdened," spending more than 30% of their income on rent. Meanwhile, middle-income rental cost burdens are increasing across the country, especially in high-cost metros (Harvard's Joint Center for Housing Studies, 2020). The housing crisis in California and the rest of the nation has been exacerbated even further due to COVID-19. Now with increased work from home, housing availability, and price pressure causing migration from central business districts to satellite cities is prompting the California regulatory environment to open up to incentivize infill development. Multifamily development is poised to become the 'asset class of the future' and the Blokable Building System is perfectly suited for "missing-middle" multifamily housing creation.

While many developers will need to adapt to accommodate California's Zero Net Energy directive, Blokable is building all-electric and zero-energy right out of the gate. Since November 2019, Blokable has been a part of the Wells Fargo Innovation Incubator (IN²), a technology incubator and platform funded by the Wells Fargo Foundation and co-administered by the U.S. National Renewable Energy Laboratory (NREL), to validate and enhance the energy performance of its prefabricated building system against industry standards. Blokable is also working with IN² to develop metrics for zero-energy readiness and the full lifecycle impact of multi-family housing development in various infill locations.

Because Blokable is a vertically integrated developer they sell no product and have no conventional client. Their only competition is market rent, and traditional developers cannot innovate at a rate that will erode Blokable's expanding equity margins. At scale, Blokable will accomplish permanent project financing that will cover 100% of costs at a leverage of 70% or less of fair market value. As Blokable scales its production and moves through phases of Industrialized Construction and ultimately Manufacturing, the goal is to drive new housing development costs down by 50% or more, fundamentally altering the landscape of housing affordability and creating paths to ownership for underserved communities. Blokable wants others in the real estate development space to follow this same VIM development model, so they too can take control of their entire build processes and help streamline new housing development.

Blokable at Phoenix Rising demonstrates that Blokable can cost-effectively produce all-electric, net zero energy-ready housing that is becoming the standard for new construction in many parts of the U.S. Under California's Zero Net Energy program, many communities are addressing climate risks and rising utility costs through regulation, including the City of Oakland, which just outlawed natural gas in all new commercial and residential construction. In the end, Blokable created 12 high-quality units of housing for a not-for-profit, allowing them to provide and operate low-income housing for the 30% to 50% AMI community in Auburn, Washington, an area that has been hard-hit by the rapid growth and housing crisis in the surrounding King County.