Stop Designing Every Apartment From Scratch. Start With Apartments That Already Have a Price.

Curtis Wong, the founder and chief executive of Cloud Apartments, a startup that designs apartments as standardized products, was walking through how a typical apartment project gets started when he summed up the problem. Developing housing, he said, is "very fuzzy and very risky."

What Wong meant, he explained, is that a developer looks at a dozen possible sites, sketches a concept with an architect, and asks a general contractor, the company that would oversee construction, for a price. Wong said that pricing is a little "finger in the wind" because it is based on a rough concept, perhaps for a 400-square-foot unit, rather than a finished design. The developer then builds a financial forecast on that guess, checks whether renters in the area would support it, and puts up his own money to secure the land and get local approvals, hoping costs and rents hold long enough to get the project financed.

Wong sees factory-built housing as a middle stage that saves time but, in the way it is done today, not cost. He calls conventional, build-it-on-site construction version 1.0, where he said everything is customized and one-off. Factory-built modular construction, where boxes are built indoors and assembled outdoors, is version 2.0. It shaves time, he said, but in the way it is done today, cost is not saved.

His proposed version 3.0 is what he calls productized construction, designed to reduce both cost and time. Instead of starting each building from a blank page, Wong said, a developer would start with building blocks that are "pre-designed, pre-approved" and "pre-priced by contractors and factories."

Because the apartment types, and what they cost to build, are already known, he said, a developer gets certainty immediately, along with savings that make the numbers work. Wong said the ultimate goal is to greatly streamline that development process and make it much easier.