Shipping container apartments’ opening delayed by global shortages, developer says

Box 500 promises more than 80 units for renters making less than 60% the Salt Lake City’s median income.

(Rick Egan | The Salt Lake Tribune) The Box 500 apartments on 500 South in Salt Lake City, made from shipping containers, delayed its opening date to later this year due to material shortages.

This story is part of The Salt Lake Tribune’s ongoing commitment to identify solutions to Utah’s biggest challenges through the work of the Innovation Lab.

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Residents struggling to pay rent will have to wait a few more months before the lower-cost, uniquely built apartments of Box 500 are set for move in after another roadblock in the long-delayed project.

Box 500, 543 S. 500 West, is made of recycled shipping containers stacked six stories tall and snapped together like LEGO bricks. The developer, Eco Box Fabricators, sees the unique building material as a more environmentally friendly construction option and a cheaper way to meet Salt Lake City’s affordable housing needs.

Like many other construction projects, Box 500′s completion has been delayed by COVID-19 supply chain shortages. Originally scheduled to be available to tenants over the summer, delayed arrival of roofing materials and an elevator for the building have pushed back the opening date to sometime near the end of the year, said Eco Box Fabricators owner Rod Newman.

Experts blame COVID-19 for supply chain shortages across the world -- everything from computers to cars to lumber has been in short supply as manufacturing slowed during the pandemic but consumer demand in some areas rose.

(Rick Egan | The Salt Lake Tribune) Box 500 apartments, pictured in May 2021, had to wait months for roofing material and an elevator before it could finish the building for renters.

Box 500 isn’t the only Salt Lake City housing development delayed by these shortages.

“In the (housing) market, we’re seeing shortages across the board,” said Orion Goff, deputy director of the Department of Community and Neighborhoods.

Supply chain problems

The pandemic has led to multiple supply chain problems for many industries, including homebuilding, said Nitin Bakshi, a business professor at the University of Utah.

“The industry is seeing a ‘triple whammy,’” Bakshi said, because there is a shortage of raw materials, a shortage of laborers and bottlenecks in the shipping process.

Everything from lumber to drywall to paint is being delayed by these shortages, said Ross Ford, executive vice president of the Utah Home Builders Association, extending the time it takes to complete each step of the construction process.

“They’re waiting months for things we used to be able to buy off the shelves,” Ford said.

Ford sees this as the beginning of a permanent change in construction, he said. To make up for longer delivery times, builders will need to order even the finishing items for a building much earlier.

The short supply in materials with current demand is causing prices to rise across the board, which has the potential to hinder lower-cost housing developments.

“The obvious response to all of this from an industry point of view is to increase the price,” Bakshi said.

Affordable housing

As conditioned by some of the grants awarded to Box 500, rents will range from $829 to $1,204 a month based on income, Amanda Best, a specialist in the housing development program, said earlier this year.

Once completed, 83 units will be available to individuals and families making less than $38,760 to $59,760 annually, depending on the size of the family, Best said.

Though affordable, the units at Box 500 are far from spacious. The 48 studio apartments are 320 square feet each. There are 18 one-bedroom and 17 two-bedroom units, which are about 640 square feet each.

(Rick Egan | The Salt Lake Tribune) The Box 500 apartments, located on 500 South, are far from spacious, but renters will only pay up to 30% of their income for rent, making them more affordable options in costly Salt Lake City.

Renters at Box 500 will only pay up to 30% of their income for rent as part of the affordability commitment of the developers. People who spend more than 30% of their income for housing are considered “cost burdened,” according to the definition used by the federal Department of Housing and Urban Development.

An unprecedented building

By building with used shipping containers that would have otherwise been discarded, Newman said his company was able to spend less on construction costs while reusing existing materials.

The construction method, often called “cargotecture,” isn’t new, but the scale of this building might be. Neither Newman nor the city identified other shipping-container buildings of this height.

A lot of questions came along with the unprecedented building, which required some deep engineering analysis to ensure the building was safe and met the city’s requirements, Newman said.

“When nobody’s done it before, there’s not a road map,” Newman said.

(Rick Egan | The Salt Lake Tribune) Box 500's developer hopes to open the building to residents later this year.

Eco Box Fabricators’ engineers created a building that meets fire code requirements, such as reliable exits and a sprinkler system, and can withstand earthquakes and high-speed winds. As it does with every new development, Goff said the city hired a third-party engineer to double-check the safety before signing off on the project.

Goff said the city is excited about the Eco Box 500 and the potential to build more affordable units in a cheaper way, particularly as Salt Lake City faces a housing shortage of about 6,000 units. That excitement didn’t get in the way of the city’s due diligence for permitting.

“We’ve been a proponent from the beginning,” Goff said, “but we also have a responsibility … to make sure it’s safe.”