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  • Writer's pictureSG Residential

How this shipping container business is attempting to flip the construction industry on its head

Updated: Oct 23, 2018

Published 9:02 AM ET Thu, 18 Oct 2018 Updated 12:15 PM ET Thu, 18 Oct 2018

Homeowners in hurricane- and tornado-prone areas now have an alternative to traditional brick and wood structures to keep their families safe: shipping containers. Their unibody steel construction exceeds structural code in the U.S. and stands up to severe conditions in seismic zones. One leader in the space is Brooklyn-based SG Blocks.

Founded in 2007, SG Blocks repurposes some of the 20 million or so containers in the world as its primary building tool. It calls itself a one-stop-shop construction platform for consumers looking for longer-lasting, greener, less-expensive dwellings.

SG Blocks manages the project from start to finish and provides industry-approved, code-engineered cargo shipping containers and complete architectural, engineering and design. Once the foundation is in and approved, SG Blocks delivers the home approximately 90 days later.

"The beautiful thing about prefabricated construction with SG Blocks is that while your contractor is doing the hole in the ground and the utilities, we're at the same exact time modifying the modules so that on Friday your foundation is finished and then on Monday, instead of having your general contractor show up for his first day, we start delivering 1,000 square feet an hour," said Paul Galvin, chairman and CEO of SG Blocks.

In March 2017 SG Blocks became the first company to receive an ESR number for a recycled material to be approved for construction. This basically makes the shipping container the equivalent of a brick or a piece of wood for construction purposes. Since then, this type of construction has exploded.

"Up until last year it was done on a one-off basis until SG Blocks and our team of engineers were able to get that as an approved mainstream building product, and since that time, we have a backlog of over 100 million contracts that have to be delivered upon, and our pipeline exceeds 300 million opportunities," said Galvin.

For 25 years Galvin's experience was working on homelessness and homeless AIDS housing in New York City through a nonprofit he founded. He said quality, costs and delays associated with traditional construction were frustrating and have not changed.

SG Blocks is working toward giving everyone their fair chance of reaching the American dream. In 2018 the company announced a partnership with Capital Plus. Capital Plus is heavily invested in first-time ownership in the Hispanic community. The partners are doing a test case for a 50-year mortgage for a container-based project, which will make owning a home more attainable.

The new housing model

Galvin also talks about plan densification. That allows a purchaser to right-size their home. A new couple or small family may only need, or have enough money for, a 950-foot container-based structure. It could be built and prepped for expansion behind the walls so when the family grows, it won't take six months to renovate. It could be expanded by adding a container on top or next to it with minimal disruption to the community or your family.

"The challenge for people living in America is that we have a very vulnerable housing class right now — whether it's people living on limited incomes or fixed incomes. Many of them are forced to live in areas where there are persistent climate threats from the ocean, tornadoes and hurricanes. What we're interested in is housing families in steel structures rather than wood structures and putting people in really safe environments that are both sustainable and longer-lasting," said Galvin.

According to SG Blocks, the cost for a container ranges from $2,500 to $5,000. And in terms of retrofitting and the price of the final product, a container-based building is about 10 percent less expensive than traditional construction and up to 50 percent faster. Finally, the company claims there is also a time-saving factor, and with faster construction, there could be faster and better return on investment.

Galvin is taking part in rebuilding Puerto Rico one year after devastating hurricanes Irma and María. His company is delivering already-built, storm-resistant structures to Puerto Rico. Eventually, SG Blocks will deliver structures, erect them on the island and have local contractors and laborers do the finish work on the inside.

In September, SG Blocks announced the formation of Sequential Modular Partners. SG Blocks will be the exclusive product supplier to Sequential in the joint venture. This will allow SG Blocks to apply for corporate, government and private businesses set aside for minorities in modular construction.

"We're creating business opportunities for communities of color and much-needed housing and schools all over the world, taking disadvantaged groups, marginalized groups and breaking down barriers so they can get their participation in the American dream," said Galvin.

The company has completed projects for the U.S. Army and U.S. Navy, U.S. Department of Veteran Affairs, the City of Santa Monica, Equinox and more.

SG, which stands for safe and green, trades on the Nasdaq under ticker symbol SGBX. Shares have fallen almost 28 percent in the past year.

Watch the video above to learn more about building with shipping containers.


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