Modular housing firm Kinexx builds homes for Chicago's affordable housing gap

Dennis Rodkin is a senior reporter covering residential real estate for Crain's Chicago Business. He joined Crain's in 2014 and has been covering real estate in Chicago since 1991.

In a factory near Midway Airport, houses are now being built the way cars, refrigerators and other products have long been made for a long time: on an assembly line.

A box-shaped module starts as a steel cage at one end of the assembly line inside the Kinexx factory on South Kildare Avenue in Archer Heights.

In the course of a week, it rolls on rails to each of 10 workstations before emerging as an insulated, drywalled box fitted out with cabinetry, stairs or a shower — depending on which room it's meant to be when 20 modules are assembled into a single-family home. The assembly line makes enough modules for one home a week.

"We’re really a manufacturing operation," says Josh Braun, CEO of Kinexx, which he founded in 2020 with Paul Tebben.

Here's how the process differs from much of modular building, Braun says: Rather than build a module start to finish in one spot on the factory floor, "we bring the module to where the worker is, where the tools are," similar to the process Henry Ford pioneered 11 decades ago.

The startup's first house went up on a lot in Back of the Yards in fall 2020 and sold by The Resurrection Project, an affordable housing developer. Kinnex sold two houses to developers in 2021, followed by 31 last year.

So far this year, Kinexx has built or signed contracts for 30 houses and looks likely to meet its year-end goal of 60, says Elle Ramel, the firm's director of business development.

Funding comes from the principals of the firm and a few investors, whom Braun declined to name. Kinexx now has 53 full-time employees, up from two — Braun and Tebben — in 2020.

"Right now the cost of the homes is not necessarily any less than building stick-built," says Resurrection Project CEO Raul Raymundo. "The difference is, they can produce the house faster in their factory and bringing it to our site."

A Kinexx house can be completed in less than three months, including a week of factory work and 60 to 75 days of completing all assembly on the site. That's compared to at least five months to build the traditional way, says Marcus Dailey, who last year bought three Kinexx houses for lots in South Shore. Weather delays and other factors can stretch the traditional method to seven months or more.

It's the plug-and-play simplicity of a modular home that appeals most, Dailey said.

"It's more predictable," he said. That's not only because components aren't exposed to the weather as during normal construction, but "the timing is predictable, because it's designed to be assembled. They tell you when they’ll deliver and how long it will take to put together."

Both Raymundo and Dailey said that smooth process makes the modular product a good tool for easing some of Chicago's enormous gap in affordable housing. "You can build these 100 at a time if you have the resources," Raymundo said.

"If we really want to (fill) a lot of these vacant lots that have been in our communities for many years, we need to scale up, build as many homes as we can all around the city," Raymundo said. Kinexx "is something you can scale up."

Resurrection, which has been building homes in moderate-income neighborhoods since the 1990s, has put up eight Kinexx houses in recent years. They sold in the $275,000 range, not including an average subsidy of about $50,000, Raymundo says. That is, the homes sold for about $325,000, but the homeowners didn't pay all of it.

"There's an overwhelming need for attainable housing in Chicago," Tebben says. In 2021, city Housing Commissioner Marisa Novara said Chicago needs about 120,000 new units of affordable housing. Tebben, a longtime advocate of modular housing, believes the ability to replicate these homes quickly and predictably "is part of the solution."

The biggest Kinexx client so far was the Harrison Row townhouse project on a 2-acre site in East Garfield Park. Built by two developers to meet the city-mandated number of affordable units, they’re being sold in the $245,000 range.

Braun says the firm's primary target customer this year is "the emerging developer in one of these neighborhoods. We feel it's a good opportunity for them because we’ve demystified what it takes to build a house."

There's another aspect of the process that Kinexx has intentionally taken the bumps out of. The modules are either 8 or 12 feet wide and up to about 19 feet long. Tebben, an architect and the firm's design chief, has carefully shaped everything so the modules fit on an ordinary trailer pulled by a pickup truck. Transferring modules to the site meets "all height restrictions, all width restrictions," Braun says.

"And we never have to close down the street," Ramel said.

Another Chicago modular home startup, Inherent l3C, based in a North Lawndale factory, makes its modules 720 square feet, one per floor of a two-story house. Kinexx modules are between 152 and 228 square feet.

Tebben said modular housing is particularly suited to Chicago because of the city's standardized lot sizes. The great majority of residential lots are 25 feet by 125 feet, "so it makes sense to use a product that's tailored to that."

Dailey initially planned to sell his Kinexx-built homes for prices in the mid-$400,000s, but as rising interest rates scared buyers out of the housing market, he converted them to rentals.

They went fast, Dailey says, in part because neighbors had been fascinated watching the modules get delivered, lifted onto the site by crane and then quickly assembled. (During day one, each home's exterior looks complete and is weather-tight, but interior work and inspections take longer.)

"People were so interested, I didn't have to advertise," Dailey says. "I rented them all" at $2,500 to $2,800 a month.

On the Kinnex assembly line, in a 60,000-square-foot portion of an old steel factory, about 20 modules are in process at any one time, each tagged with the address it's headed for when done.

Braun says with Kinexx already halfway to its 2023 goal of making 60 homes, "we feel we’ve hit our pace." If growth continues or a single big client signs on, they can add a second assembly line in another bay of the Kildare Avenue factory.

A goal for 2024 is to go retail, Ramel says. A private owner of a lot, not a developer, would be able to visit the factory, order one of the company's 12 modular designs, get a delivery date and then wait for it to arrive.

If that vision plays out, buying a home for a vacant lot would be a bit like ordering a new car — but specifying the exterior finish instead of the seat covering.

Dennis Rodkin is a senior reporter covering residential real estate for Crain's Chicago Business. He joined Crain's in 2014 and has been covering real estate in Chicago since 1991.

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