Forest Lake developer aims to drive down apartment costs

A worker adds weatherproofing to an apartment wall section, with a window cutout, as others load a truck at Norhart's apartment manufacturing facility in Forest Lake on Tuesday, March 21, 2023. Norhart is attempting to change the trajectory of modern-day construction by building apartment units in-house -- building steel wall panels, ceilings and floors for each apartment unit in Forest Lake before bringing them to the construction site. (John Autey / Pioneer Press)

Mike Kaeding, CEO of Norhart, talks about changing construction industry practices at the company's Forest Lake fabricating facility on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

A welder adds bracing to a wall section at Norhart's apartment manufacturing facility in Forest Lake on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

A technician works with a stud forming machine, a machine specifically tailored to form wall studs from coils of steel, at Norhart's Forest Lake facility on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

Workers carry a wall section at Norhart's Forest Lake facility on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

Workers assemble a floor/ceiling section at Norhart's Forest Lake facility on Tuesday, March 21, 2023. After the wall and flooring panels are constructed they are transported to the construction site via trucks, where they can be quickly put together, almost like Legos. (John Autey / Pioneer Press)

Workers assemble a wall section at Norhart's Forest Lake facility on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

Rolls of sheet metal ready to be formed into studs and joists at Norhart's Forest Lake facilty on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

Metal studs are stacked up waiting to be assembled into walls at Norhart's Forest Lake facility on Tuesday, March 21, 2023. (John Autey / Pioneer Press)

In Forest Lake sits a manufacturer attempting to change the trajectory of modern housing construction.

Norhart's method of building apartment unit components in-house, and then completing the development on-site in five-hour rotations, would eventually drive down the cost of housing in general and open up the market to more people, CEO Mike Kaeding says.

Norhart is a one-stop apartment development operation, handling everything from a building's design and construction to its leasing and marketing. It's been in the construction business for 30 years, originally operating under the name Kason, and was founded by Kaeding's father, Edward Kaeding, before Mike took over in 2014.

One star of the show is Norhart's apartment manufacturing facility, EVE, where steel wall panels, ceilings and floors for each apartment unit are built before being trucked to the construction site. The 25-person production team at EVE completes the framing, bracing, drywalling and weather-proofing all in the factory.

One innovative component at EVE is the stud former, a machine specifically tailored to form studs from coils of steel. Once formed, the machine can cut precise holes into the studs for future electrical wiring, Kaeding said.

The stud former is also programmed to produce dimples, or placeholders, which eliminates the layout process on site and significantly reduces construction time, said Charlie Igo, production and automation manager for Norhart. At EVE, they are able to produce a wall every 15 minutes, which makes for two and a half apartment units a day, Igo said.

After the wall and flooring panels are constructed, they are transported to the construction site via trucks that carry up to 20 panels at a time, Igo said. With the panels on site, the walls can be quickly put together, almost like Legos, said Elena Neilson, head of process improvement.

While on site, Norhart's construction team works in five-hour intervals, moving consecutively through each phase from framing to electrical as they move through the building, similar to an assembly line, Kaeding said.

By building the main apartment components in the controlled environment at EVE, Igo said the team is able to work more quickly, more efficiently and without weather delays. Manufacturing at EVE is also safer for the workers, Neilson said, because no one is constructing while on a lift.

By using these processes, construction costs are lowered 20% to 30%, Kaeding said, noting the goal is to get the savings up to 50%.

The streamlined manufacturing process at EVE has been underway for six months, Kaeding said, and has the potential to decrease construction time on an apartment complex from 15 months to nine months.

Norhart's ultimate goal is to reduce the cost of rents nationwide by lowering construction costs, Kaeding said.

While there isn't a one-size-fits-all solution, Norhart is saving money wherever it can by sourcing materials across the country, crafting its own steel studs in-house, all with the goal of improving productivity.

The company's newest property, Norhart Oakdale, will be the first to utilize both the assembly line style construction process and the off-site production team at EVE. Still in the early stages of construction, the complex is expected to cost Norhart around $64 million but would otherwise cost developers roughly $98.5 million, Kaeding said.

Housing demand has risen faster than homes are being produced, Kaeding said. Norhart is aiming to develop its properties at scale and at a low cost point so when prices start to decline, he said, "We can keep building and fueling that fire to drive down prices for others."

Minneapolis-based Rise Modular is also building apartments in a manufacturing facility and then transporting them to the work site in an effort to reduce the cost of housing and hasten the speed of production.

Christian Lawrence, founder and CEO of Rise Modular, said his company builds entire apartment units off-site from wall paneling to installing kitchens, bathrooms and light fixtures. By doing most of the construction work off-site, Lawrence said they are able to put up apartment units 30% to 50% faster than the traditional model while also cutting down on noise pollution, traffic and debris pollution in the area.

Rise Modular completed the 193-unit Alvera Apartments on West Seventh Street between Grand and Smith avenues in St. Paul in January 2022 after 13 months of construction, which was "a testament to the company's speed," Lawrence said.

As for the residents of the buildings, Lawrence said they would never be able to tell that the buildings were constructed any differently, noting that they are indistinguishable from traditional models.

On the horizon for Rise Modular is an 84-unit "deeply affordable family housing" project for the Minneapolis Public Housing Authority, said Lawrence. Each of the units will be available to households that are at or below 30% of the area median income.

"We’ve proven the technology, it's not just an idea," said Lawrence. "We think this is the future of construction."

Norhart Oakdale, located at 7601 N. Third St. in Oakdale, will open to residents in 12 months with more than 300 units, said Stacy Ekholm, Norhart's chief operating officer.

Multi-family housing is booming in Oakdale right now, said City Planner Luke McClanahan. Once constructed, Norhart Oakdale will be the tallest building in the city at seven stories, McClanahan said.

While the construction type is different from what the city has seen historically, McClanahan said the completed building will have a lot of characteristics that the city's residents are looking for, with its proximity to the Gold Line bus rapid transit and its mixed-use design.

Norhart Oakdale will also have a ground level restaurant and coffee shop, McClanahan said. "I cannot think of another property that is set up like that in Oakdale," he said.

The finished apartment complex will also feature a co-working space, Ekholm said, noting that one of the goals is to have residents "want to work from home."

The apartment complex will house units ranging from studios to three-bedroom apartments and offer two-level penthouses. A one-bedroom apartment at the Oakdale location will cost around $1,600 a month, Ekholm said.

Rent prices in the area vary greatly, McClanahan said. St. Paul's Alvera Apartments charge roughly $1,375 for a one-bedroom unit.

Pricing for Norhart's units is based on a variety of factors including the available amenities and the location, Kaeding said.

In order to create a streamlined process, Kaeding said, "We brought it all in-house."

Instead of trying to coordinate each facet of the build with a different company, Kaeding said they decided to bring it all in-house and work as one coordinated team in order to maximize efficiency.

Norhart currently employs around 250 people ranging from architects to plumbers to designers.

"Having everyone working together improves the quality," Neilson said, noting that team members are able to coordinate more easily and communicate when timing issues come up.

Bringing engineers in-house was a game changer for the entire operation, said Neilson. Instead of catching mistakes like incorrect measurements mid-production and having to redo each piece, they now know ahead of time and can phone in adjustments as they come up.

In addition to the Oakdale location, Norhart is working to bring its apartment complexes to Cottage Grove, Ramsey, Inver Grove Heights and the state of Texas, Kaeding said. Norhart will also break ground on a new 40-acre manufacturing facility in Forest Lake in about a year.

"We’re trying to be the Google of construction," Kaeding said.

Sign up for Newsletters and Alerts