The U.S. needs to build much faster and much cheaper. Steel magnate Barry Zekelman is gambling $1 billion of his family's money that he can churn out prefab apartment complexes to meet that demand.
The U.S. needs to build much faster and much cheaper. Steel magnate Barry Zekelman is gambling $1 billion of his family’s money that he can churn out prefab apartment complexes to meet that demand.in the Phoenix suburb of Chandler, and steel billionaire Barry Zekelman is showing off his housing factory. At one end of the factory, hollow structural steel from one of Zekelman’s steel plants comes in, at the other the “modules” that will be stacked into apartment complexes go out.
With climate change spurring hurricanes and extreme heat, Z Modular’s steel-based construction may have an additional advantage. Zekelman says that its Arizona apartment complexes have more efficient heating and cooling – important when temperatures soar above 100 degrees – because of their materials than traditional constructions. They also may withstand storms and, especially, fires better than wood construction, giving Zekelman an advantage on durability and, potentially, on insurance costs.
Z Modular's apartment complexes start as boxes in the factory, then get stacked into place to form three- and five-story buildings.This is an extraordinarily capital-intensive business and even Zekelman’s wealth won’t be enough to support his dreams of expansion. He’s already pondering whether he might take Z Modular public or partner with a REIT or a private-equity firm to get the cash to develop tens of thousands, or perhaps even millions, of apartments.
“I needed the challenge,” he says. “I had a tendency to like a crisis because I get gratification from solving it. Sometimes I create my own problems so I have something to do. If everything is running in a steady state and perfect, I’ll throw a wrench in it. I can’t sit there.” Today, Zekelman Industries – 100% owned by Barry Zekelman and his brothers Alan, 62, and Clayton, 55 – produces some 2.5 million tons of steel from 17 factories. Neither of his brothers have an operating role. “I would say I kind of became a bully if you will,” he says. “I had to move faster than they were. I have some regrets about that….On the other hand, you can’t love me for what I do and then chastise me for what I do.
Early modular projects were a financial sinkhole. A 2016 project as subcontractor on short-term family housing units in Washington, D.C. ended in litigation between Z Modular and general contractor MCN, with claims and counterclaims of breach of contract. Zekelman’s efforts to build hotels subsequently fell apart during the pandemic when Americans stopped traveling. “I had $300 million of hotels sold.
Barry Zekelman Zekelman Industries Z Modular Modular Housing Housing Crisis Factory-Built Housing Steel Billionaire Affordable Real Estate Phoenix
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