Some Call it a Shipping Container, Others Call it Home

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Years ago, while working as a real estate broker specializing in schools and churches, Katalina Klein had a client who used shipping containers to set up classrooms quickly to accommodate the growing student population.

"At that time, I figured if you could use shipping containers in classrooms with children, you could use them for houses. That is when the idea began to emerge," Klein said.

The idea took awhile to catch on. Most people simply saw a cold, rectangular steel box.

But Klein saw a container as a blank canvas for a new home. After she built a one-bedroom showroom to demonstrate what it was about, the concept took off.

Klein is the founder and CEO of Kubed Living. The Sierra Madre, California-based company works with partners and fabricators to turn shipping containers into homes, offices and gyms.

Gym built out of shipping containers (Photo: Kubed Living)

Klein, who has an undergraduate degree in art, an MBA in corporate strategy and years of experience in real estate, sees her company filling an important housing niche.

She told FreightWaves she noticed many middle-class workers were unable to afford houses near their jobs and were being forced out of city centers, lengthening their daily commutes. She established the company in 2018 with a mission to provide affordable housing and repurpose shipping containers.

Kubed Living sometimes uses new containers when used containers are not available. Klein said that a 40-foot high cube new or used container appropriate for modification cost $6,000 to $8,000 in December, depending on the location. High cube containers measure at 9 feet, 6 inches in height – 1 foot taller than standard shipping containers.

The pandemic has increased overall demand for shipping container structures, especially for gyms and container homes in rural and remote areas such as the desert.

"During the pandemic, people realized that they can work from anywhere," Klein said. 

Read: Want your own farm? This one comes in a shipping container

Modification process

The dimensions of typical 40-foot shipping containers offer little wiggle room, but their durability and industrial look appeal to a certain set of potential homebuyers.

Modifying a shipping container into a home, gym or office is much like converting any shell. Kubed Living designs the homes and works with factory partners to build them, and Klein said there are some key rules related to structure and insulation.

"When you're modifying a shipping container, the trick is, do not touch the top rails, do not touch the bottom rails, do not touch the corner posts because you're really killing the structure," said Klein. Instead, she noted, "what you can modify are the sides."

Klein said an average 40-foot container home would have at least two eight-foot slider doors and two or three windows. 

Whenever an opening for a window or door is created, it has to be reinforced with either lumber or steel studs. Due to increasingly common wildfires, customers in California are partial to steel studs to reduce the amount of wood in their homes. About 80% of Kubed Living's customers live in California.

Once the openings are reinforced, builders install the plumbing, electrical and mechanical systems.

(Photo: Kubed Living)

Next is the insulation. Klein said that Kubed Living uses spray foam because, though it's "not as good for the environment," it swells and fills the cavities in shipping container walls. If insulation leaves gaps in these cavities, condensation can cause major issues. She said wool insulation would be more sustainable than spray foam, but the costs are much higher.

Klein noted that California has some of the most stringent energy codes in the country, with ever-rising standards. Meeting those standards gives Kubed Living a leg up on competition in other states because its homes are extremely energy efficient.

Thermal performance of a building could depend on the local climate, according to a 2016 life-cycle assessment of shipping container homes done by the Royal Melbourne Institute of Technology University in Melbourne, Australia.

Container homes in Southern California require a different level of insulation than homes built to withstand winters in states like Minnesota or Montana. Kubed Living has adapted its building techniques to serve clients in several states.

The used containers that Kubed Living repurposes meet guidelines set by the International Code Council to ensure that they are safe to live in, Klein said.

Little Pipes Ranch

Seven single-family luxury vacation rental homes using shipping containers are being designed by Kubed Living and planned for delivery to Yucca Valley, California. They will reside at a property called Little Pipes Ranch in the desert, in the greater Joshua Tree National Park area.

Kylie McCarthy, founder and CEO of Marina Jean Capital, explained how the planning and building process is going for the company. Marina Jean Capital hired Kubed Living to design the luxury container homes for Little Pipes Ranch.

"You had to really get creative with stacking plans" because of the size, shape and modification limitations of using shipping containers, McCarthy said. But it has resulted in unique design plans. 

Each rental home will use multiple shipping containers — the smaller ones two to three and the larger ones five to 10.

Each home will rent for $500 to $1,500 per night, depending on its size.

Is there a container surplus or shortage?

In the 1990s, people became interested in repurposing shipping containers because the structure of the steel containers proved useful for various applications. There was a surplus of containers at U.S. ports due to imbalances between imports and exports between some countries, making used shipping containers affordable for repurposing.

Freight Farms started out by repurposing used shipping containers to create controlled environments for hydroponic vertical farming. However, the COVID-19 pandemic, the increased demand for ocean shipping and the container shortage in 2021 made new and used containers much more expensive and difficult to obtain.

Read: Tanker, bulker, LNG rates drop. Container rates hold near top

Asked how difficult sourcing containers for homes has been since the container shortage began, Klein replied, "Terrible. Prices have gone up."

She shares a list of companies' container inventory if Kubed Living's fabricators have a hard time finding containers. Even McCarthy, who isn't part of the shipping container sourcing process, added, "They're harder to get now than they were pre-pandemic."

Kubed Living is considering other solutions, such as modular builds, because of "almost doubled" shipping container prices that are affecting the bottom line and what the company is able to offer customers at a lower cost, Klein said. 

She started using containers to provide homes for middle-class workers such as teachers, police officers and firefighters who can't afford housing in urban areas so that they don't have to commute long distances. Rising costs are putting that mission to the test.

Cost, speed benefits

Still, Klein said the company's container homes are about 50% to 70% of the price of typical homes in the Los Angeles area.

Excluding site work, she estimated the average starting price for the homes is $220 per square foot, or about $220,000 for a 1,000-square-foot home.

Kubed Living's homes tend to be more condensed. A conventional two-bedroom, two-bathroom home might be 1,600 square feet. "We say, ‘We can do this little home in under 1,000 square feet,' so our footprint is smaller," Klein said. 

Some modular builds and tiny homes are classified more like RVs, especially if they are built on wheels. These structures have several different building codes to follow. Kubed Living designs container homes that adhere to local building codes, which include all of the necessary standards. This simplifies the approval process "and that makes the building faster," Klein said.

Construction is more efficient and quicker than it is for typical homes because most of it is done in a factory, avoiding weather delays. In addition, tools and materials don't need to be transported to different locations for fabrication.

Office building made of shipping containers (Photo: Kubed Living)

Once the design and planning are complete, the factory work takes an average of four to eight weeks, with an additional two to four weeks once the home has been shipped and installed on-site to finish the bathroom, kitchen and detail work.

"It isn't as cheap as you think it will be," McCarthy said, as her company's luxury homes will be fitted with high-end finishes. She is waiting on the final estimate for her company's seven homes.

Financing and building codes

Financing a new kind of home comes with challenges, and some lenders and building inspectors don't understand the concept of turning a shipping container into a home.

"The biggest hurdle is really the financing," Klein said. Lenders don't have anything to lean on because these homes are built in the factory, and there are few materials on-site before construction is complete. Klein predicted that bridge loans and other financing programs will likely become more widely available but noted that it's currently a "bit of an issue."

Three years ago, the company couldn't get past a building inspector who Klein said "could not get why anyone would live in a shipping container," even though the home was built to local standards. But, she said, "It's becoming easier and more of an accepted way of building."

Little Pipes Ranch hasn't run into financing problems because its rental homes will be classified the same as any modular home, McCarthy said.

Sustainability

"We're trying to make these [homes] as sustainable as possible, so I like the idea of using something that was already in existence," McCarthy said. But the Little Pipes Ranch homes could be constructed using new or used containers, depending on what is available.

The Little Pipes Ranch shipping container homes will feature Tesla solar roofs, McCarthy said. They'll run solely on solar energy and hopefully be net-zero emissions homes. She added that wells will be built on-site.

Because most construction happens off-site, McCarthy said shipping container homes have smaller impacts on the environment and lead to less disruption. Once the factory work is finished, the homes will be lowered into place by cranes.

"A container home offers a fast, green and sustainable approach to building because of its standardized and reliable factory-controlled manufacturing," the 2016 Australian study said. However, it added, "There is still a lack of an in-depth sustainability study to evaluate life cycle environmental impacts and costs required to make a shipping container home liveable, compared with traditional building methods."

The first shipping container home at Little Pipes Ranch should be finished within six months of being started, which McCarthy said should be soon. The factory has limited capacity, so each of the remaining six homes should be ready for delivery every eight weeks following the first.

McCarthy said she will be documenting the process once Little Pipes Ranch breaks ground. 

Click here for more FreightWaves articles by Alyssa Sporrer.

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Images provided by FreightWaves

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.