Homeowners turn to prefab units for extra space

When Morgan Kellock's son recently decided to live at home while attending the University of Washington, she knew she'd have to find more space. Both she and her husband work at home.

While her husband already had a studio office on their Lake Forest Park property, she had been counting on using her son's upstairs bedroom for an office.

The first option she and her husband crossed off the list was building from scratch. "We built our own house here so we knew what the cost of construction was," Kellock said. "And we also knew that it would take a long, long time for us to get it together to do it ourselves."

So the Kellocks turned to prefabs. "We looked at all kinds of Home Depot kits and stuff like that," said Kellock. After much consideration, she chose a 10-foot-by-13-foot unit from Seattle manufacturer Modern-Shed in a corner of the property.

Since Kellock planned to use the building both as an office and a studio for her yoga teaching, she opted for extra-cost features, such as wood paneling and French doors.

The cost? Including installation and wiring for electricity, a little over $20,000. And everything was done in four days.

"It's very, very cute," she said. "I love it and everybody who comes over loves it."

While simple prefab garden sheds have long been available, designer prefab units for offices, studios and other purposes are relatively new to the market.

Modern-Shed opened its doors in 2000. Another high-profile manufacturer — Modern Cabana in San Francisco — launched in 2005.

The founders of both companies believe the time is ripe for their products, thanks to changing lifestyles and even the recession.

That's especially true in Seattle, according to Ryan Grey Smith, owner of Modern-Shed.

"People's lives are changing, and the houses we're living in were designed for lives 60, 70 to 80 years ago," said Smith. For starters, more people work at home.

Remodeling, however, can be expensive and time consuming, said Smith. "A lot of people are not real excited about tearing apart a house, and you can't do that much with a lot of these houses in Seattle."

Smith says his company has sold nearly 200 units to people looking for cost-effective ways to add functional space to their properties.

The owners of Modern Cabana, which expects to sell about 35 units this year alone, believe the recession has been good for their business. "The economy has lent itself to thinking smaller, which we have always been pushing," said Casper Mork-Ulnes, a founder and lead designer. " That is what this economy is proving to people — that you don't need that humongous house, that big remodel and such. You can really be inventive with your space."

And the prefab units' price points are, of course, a major part of their success. With costs beginning below $12,000, said Casper, "most people aren't going to have to look for a second mortgage on their house, which is almost impossible for a lot of people to get now."

Do it yourself

Most prefab units also offer customers opportunities to save money by doing much of the work themselves.

While manufacturers provide installation services for additional cost, some customers do the assembly. And some may choose to do just selected parts of the installation.

"To save some money, I did all of the trenching for the [electrical] conduit," said Benjamin Matthews, who purchased a 120-square-foot unit from Modern Cabana to use as an office at his San Mateo, Calif., home.

"I also made the foundation for the studio. Then the Modern Cabana team came in and did the rest. They put the unit up in about four or five days."

Then Matthews added a deck and a fire pit. The result, he said, was "a whole nice little area where we could relax as a family and I could have clients over."

Matthews said the studio's design was important because design is his business. "I feel like I have this custom-built studio," he said.

Having the unit separate from the house is another professional plus for Matthews. "It's helpful for me that it separates me from my home," he said. "I feel like I really and truly have a creative work space."

Homeowners thinking about installing a prefab outbuilding will still need to consider zoning and building-permit issues. Most manufacturers say they are there to help if necessary.

"If you require permits," said Casper, "we provide all the drawings."

In Seattle, units of less than 120 square feet don't require building permits in most localities. And many communities allow units of up to 200 square feet to be installed without a permit.

Permit for plumbing

Installing electrical wiring and plumbing, however, still requires appropriate permits regardless of the size of the unit. As a result, many cost-conscious customers forgo plumbing and simply string extension cords for electricity.

Richard Hagar, owner of American Home Appraisals on Mercer Island, said it's the market that ultimately determines whether an outbuilding adds value to a property. For appraisers, the amount of increased value, if any, depends upon several factors.

First, the building must be relatively permanent, not a mobile home on bricks. "Once a building become affixed to a property, typically we find it does add value," Hagar said.

Does a structure sitting on concrete piers buried in the ground count as "affixed." That's a gray area, said Hagar.

Is it living space?

Finally, the appraiser would consider whether the outbuilding is simply a shed or a living space.

"For us to consider something to be living space, it has to be illuminated, it has to be heated and it has to be closed to the weather," said Hagar.

"I think for some buyers it can be a definite plus," said Kim Edwards-Fukei, with Windermere Services in North Seattle. "People are looking for ways to make more out of less space. And if it isn't a plus, it can be removed relatively easily."