Putting the "Fab" in Prefab
Empyrean International is building a new business around hip modular homes.
(Business 2.0) - When Michael Harris visited Dwell magazine in November 2004, all he wanted was some ink for his homebuilding company, Empyrean International. What he got was Empyrean's most valuable business partner to date. At the magazine's San Francisco offices, editor-in-chief Allison Arieff handed Harris a photograph of a sleek prefabricated home in Minneapolis called the FlatPak house. She was planning to run the photo in the magazine and knew that the architect, Charlie Lazor, was looking for someone to manufacture the design on a mass scale. A match was made. "Our company was founded by architects," says Empyrean CEO Harris. "We care more about design than 99.9 percent of companies in the pre-engineered housing business."
Within a year, that serendipitous meeting had kicked off a new line of high-end prefabs known collectively as the Dwell Homes by Empyrean. They include Lazor Office's FlatPak house, another unit by New York's award-winning Resolution: 4 Architecture, and one designed in-house by Empyrean. Favoring glass walls, clean lines, and loft-like rooms, the three designs have prompted more than 7,500 customer inquiries since they went on the market in September. Empyrean has also hosted half a dozen design seminars, each attended by 100 to 200 landowners interested in buying Dwell homes. But more important, the company has agreements to build 29 Dwell homes this year, and Empyrean is now awaiting site selection for a planned 40-unit Dwell condo development in Sacramento.
That makes 47-year-old Empyrean the clear leader in the nascent U.S. prefab modern home industry; few of its competitors have sold more than a handful of units. Empyrean's factory in Acton, Mass., already pumps out about 200 prefab homes a year--primarily conventional suburban designs--and CEO Harris believes that Dwell models will make up as much as half of his business by 2008. "The level of interest we have received on the Dwell homes is greater than that for everything else we do," he says. "And we have not spent a penny on advertising."
For that he can thank the branding partnership with Dwell, which runs a full-page Empyrean ad in every issue--free of charge but worth about a quarter of a million dollars annually. In exchange, the magazine will collect a licensing fee on every home sold, and it gets to veto any major design changes.
Though prefab, the Dwell homes aren't exactly cheap. A typical 3,000-square-foot design can cost anywhere from $500,000 to $700,000, depending on options and location. Still, that's less than hiring an architect--and paying the typical 15 percent architect's fee--to build the same modernist home from scratch.
Fortunately for design-savvy buyers, Empyrean's mass production is actually mass customization. Each home is composed of standard parts, like a Dell computer, then tweaked to satisfy clients' tastes. The houses also have to comply with local building codes to withstand hurricane winds in Florida, snow loads in Minnesota, and the like. "We are moving toward the notion of architecture as a product," says Joseph Tanney, one of the principals at Resolution: 4 Architecture. Yet unlike other prefab makers, which often deliver complete homes on flatbed trucks, Empyrean assembles parts onsite anywhere in the country, reducing shipping costs by as much as 50 percent. Empyrean's nationwide network of 300 contractors can perform a typical installation in three to five months.
And just who is snapping up these dwellings? So far, it's mostly young sophisticates with an appreciation for good design. In fact, nearly 14 percent of all the people who inquire about a Dwell home turn out to be qualified to buy one, compared with 9 percent for Empyrean's other prefab homes. But Lazor predicts that the market will grow even broader. "Every year there are more people who come to us and say, 'I want what you do,'" he says. "Modernism is for everybody."
Erick Schonfeld is an editor-at-large at Business 2.0.
From the March 1, 2006 issue