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Intermodal Structures

251 Bagley St., Mare Island, CA 94592

415-887-2211

www.intermodalstructures.com

Vallejo’s Mare Island has been attracting modular construction companies in recent years, but Intermodal Structures is taking a more simplified approach to large-scale production.

Rather than stick-build residential dwellings with wood or metal studs as is being done in the hulking former Navy submarine periscope factory across the street on the island’s waterfront, Intermodal Structures is taking a hybrid approach to manufacturing, according to co-founder Craig Severance.

“Rather than being vertically integrated, we outsource manufacturing of components with lower margin, but retain design, sales, marketing and assembly of higher-margin components,” Severance said.

A supplier in Shanghai welds together a frame with the dimensions of a standard 40-foot-long, 320-square-foot oceangoing shipping container, sans the corrugated metal siding typical of them. The frames arrive in the Port of Oakland and are trucked to the Mare Island warehouse at 251 Bagley St., subleased from XKT Engineering. Once there, the modules are decked out with mechanical and electrical systems, including specially designed ductwork and high-end audio-visual equipment.

“These are not shipping containers, but they can be loaded inside one,” Severance said.

Part of the company’s strategy is to make the modules “future proof.” That means to design them to be truly relocatable, reconfigurable and reusable. Each iMod moment frame has 6 tons of heavy steel, allowing the modules to be connected together horizontally and vertically, up to two high. Strength of the frame allows for modules to be installed without walls, creating columnless rooms, terraces and atriums. But integral to the strength of shipping containers are the metal shear walls, so additional framing has to be added if holes are cut in the siding.

Intermodal Structures recently moved into the Mare Island factory and is working to outfit a six-module, two-story office building to the Long Beach Unified School District, the third-largest in California. The modules are set to be ready to ship this month, but the site pad is not expected to be available for delivery until September, Severance said.

This is one of several buildings the company has constructed in its nine-year history, but the project represents a renewed marketing focus on education, health care, hospitality and insurance markets, Severance said.

“One in six Californians spend time in classrooms, so that’s a vertical ripe for exploration,” he said.

It’s estimated that 12 percent of the 960 public school districts in California will need to replace $22 billion in classrooms in the next five years.

The company is approaching school districts with large numbers of aging relocatable classrooms, promoting the ability to add and remove classrooms vertically or horizontally in a few days. One-story classroom buildings can be converted into two stories, and vice versa. The modules going to Long Beach have been relocated nine times in the past six years, for different applications on East and West coasts, Severance said.

The California Division of the State Architect, which approves school designs, in March of this year issued a project certification for Intermodal Structures’s one- and two-story relocatable classroom buildings, with four classrooms and terrace modules on each floor. The Los Angeles Unified School District, the second-largest district in the nation, has approved Intermodal Structures and another company to seek contracts to replace about 5,000 relocatables, or over 5 million share feet.

Such classrooms and school offices can be outfitted for around $200 a square foot and assembled on site in two hours. The company can quote such low numbers by outsourcing much of the manufacturing and focusing on high-volume contracts, rather than vertically integrating production onsite and selling modules individually, Severance said.

Intermodal Structures

251 Bagley St., Mare Island, CA 94592

415-887-2211

www.intermodalstructures.com

The modules going to Long Beach have traveled with Intermodal Structures throughout its evolution from a side project by a global logistics company. In 2009, Intermodal Structures was a joint venture with three divisions of Dutch conglomerate A.P. Moller-Maersk, known for the Maersk name seen on vessels and containers around the world. The goal was to create prefabricated modular buildings that could be moved by various modes, with one use being disaster relief.

After five buildings were installed in Portsmouth, Virginia, Guam, Chile and Haiti, Intermodal Structures chose to shift its focus to the California classroom market in 2014. The company is led by Severance, a Sausalito resident from the world of commercial real estate, and Reed Walker. The latter owned M4 Homes, based at the former Codding Steel Solutions panelized light-gauge steel factory in Rohnert Park until the housing market cratered in the Great Recession.

Another market Intermodal Structures is approaching is transitional residential units for home-insurance policyholders.

Modular-housing manufacturers in the North Bay and beyond have been gearing up to supply that market after the October wildfires destroyed upwards of 6,000 homes in Sonoma, Napa, Mendocino and Lake counties.

Factory_OS, which opened its 286,000-square-foot factory across the street from Intermodal Structures earlier this year, already has thousands of modular homes on its build list for multifamily projects in San Francisco, Silicon Valley and the East Bay. The company said it was considering projects in the burn areas.

Santa Rosa-based HybridCore Homes already has delivered modules from its contract factory in Sacramento to burned home sites in Santa Rosa’s Coffey Park neighborhood. Napa-based Central Valley recently opened a prefabricated wall panel factory near Sacramento and has delivered panels to home sites in Coffey Park.

But instead of marketing the transitional units to property owners, Intermodal Structures is gearing up to serve insurance carriers with two- and three-bedroom units. The concept is that the policyholder would live in the unit until the home is rebuilt, and the insurance company would relocate the unit to another disaster area. The estimated cost of outfitting such units is $100 a square foot, or $96,000, compared with the unrecoverable cost of covering rent for policy holders for years.

Intermodal Structures is in advanced talks with an investment bank about supplying the $12 million needed to build an inventory of home and classroom modules to sell and lease, improve the Mare Island plant to be able to assemble at least a module daily and hire more employees, according to Severance. The company has seven employees now and would expand to 40 or 50 when full production begins.

About $100 million would be needed to capitalize the leasing side of the business, he said. The pitch for leasing is a blend of the appreciation potential of class A commercial real estate investment property with the economics of equipment leasing, such as pretax returns up to the low double digits plus accelerated depreciation for taxes.

If orders for Los Angeles classrooms come through, the company may need to set up a Southern California factory as well, Severance said.

Another market in the offing is class A office space, typically defined as having high-end finishes and commanding top rents in a market. Industrial real estate investment trust Prologis is interested in ordering a multistory sales and marketing office building for the 2,000-acre Prologis International Park of Commerce in the California’s Central Valley. The idea is that after the build-to-suit deals are inked for the all the space in the project, the office modules would be taken apart and reassembled at another Prologis project elsewhere in the world, according to Severance.