What role can machine learning, offsite construction, and environmental sustainability play in supporting missing middle housing development? How can we equip small, local developers with the right tools to streamline their processes, decrease delivery timelines, and increase construction quality? These questions are top-of-mind for the team at Madelon. Learn about how Madelon started, its impact so far, and where it’s going next.
Madelon was a 2023 Ivory Prize for Housing Affordability Finalist in Construction & Design.
Released in Partnership with the Builder's Daily
TRANSCRIPT
00:00
HANNAH: My name is Hannah and this is the House Party podcast from Ivory Innovations. We bring you the top entrepreneurs, researchers, and practitioners in the industry to shine a light on housing affordability solutions.
Intro Music
00:24
HANNAH: Today I'm joined by Joseph Ruiz, the co -founder and chief of architecture for the Madelon Group. Madelon helps streamline the development process and connects stakeholders to industrialized housing manufacturers. The Madelon platform not only utilizes machine learning to assist with site selection and underwriting, but it also integrates pre -vetted modular factories, helping to bridge the gap between housing providers and industrialized housing manufacturers. It is this innovative combo combo that led us to nominate Madelon as one of our top 25 finalists for the Ivory Prize last year. Today, roughly 4 billion people, about 55 % of the world's population live in urban areas. By 2050, the urban population is set to grow by more than 6 billion. The demand for dignified, affordable, and well -designed housing in urban areas is what three Madelon co -founders have said. set out to address. The Madelon Group developed the Red Tech Platform, which is a suite of tools to support small and medium -sized developers from site analysis all the way to selecting a property management company and leasing up. The platform works in New York City, Los Angeles, and Denver and is free to use. Once project development begins, Madelon has two pricing models. One for Madelon and one for Madelon. rate projects and one for affordable projects. Something that makes Madelon particularly unique is its partnerships with off -site construction manufacturers. Off -site construction can contribute to higher quality construction, less waste, improved safety outcomes, and faster delivery. By connecting its customers with off -site partners, small developers can access the benefits of off -site and bring more affordable projects. infill housing to our cities. We're so happy to have Joseph on with us today to tell us more. Joseph, thank you so much for joining us.
02:19
JOSEPH: Thank you, Hannah, for having me. I'm excited to be here.
02:23
HANNAH: So you've been in real estate and architecture for your entire career. And before starting Madelon, you were pretty deep into co -living. You and one of your now co -founders actually designed and built the first ground -up co -living building in Latin America called Casa Uno. What drew you to that space?
02:42
JOSEPH: Well I'm an architect by training. I studied architecture in San Diego and ever since the beginning I was always interested in the residential branch of architecture. At the end of the day I think housing I will argue is one of the most effective effective tools to measure the functionality of a city in the sense like the most essential component of that of human civilization, you know having a shelter. So For me working with that has always been very rewarding So being conscious of these we were always here to work and we had the opportunity to work in multiple residents residential projects in specific locations at one time. I don't think we ever worked on an isolated project. This helps us understand the context in which we were developing our concepts better. And in fact, these creatin contexts became kind of like the drivers of our innovations in development. So the same thing happened with co -living. At a certain point in our practice, we were working on a shared living project in Mexico City that was going to be prefabricated. If we were also working on a four unit project in Denver, that was meant to be operated as a shared living model. We were doing several multifamily buildings in Tijuana in Mexico City, and we were at the same time. all of these conferences out co -living in New York and when at that moment a developer approached in Tijuana approaches with a piece of land and he wanted to the he wanted to do something of like different in this very interesting part of the city so we took that we took that piece of land and and treated it almost as a housing lab. We also took, in 2013, we did a housing competition in Boston that we actually won first prize. So, we took all of these learnings across our architecture career, and we brought it all into this physical manifestation that was Casa Uno. So we treated it as a housing lab where we tested different models of housing. One of them was co -living, but we also did some microunits, some studios. We did a tiny house. And also, we had this kind of interesting community component. We had some communal areas where people could gather there and, you know, sit down. we created an all around like vertical villa where people enjoyed living.
05:40
HANNAH: Wow, fantastic. And so I want to learn about how you transitioned from co -living and this focus on co -living to founding Madelon. There are definitely some parallels between the two, like both co -living and co -living. you've built with the Madelon platform, tied to affordability, I think, but the end of the day, co -living is different than the products that you now are helping developers build with Madelon. So what prompted that shift?
06:07
JOSEPH: Yeah, I think co -living, well, it's an interesting approach that has been used for decades to provide more accessible housing. It's definitely not something new, it wasn't that new. back in 2018. It's not new now. It was something that has been used for a long time. But it was kind of like more institutionalized and formalized recent years. While it's interesting, it ends up making sense or having more impact in certain markets. Now, of course, New York is the place to do this because there are so many people that need so much support. It’s a city that is so expensive to live in. So for us, it made sense to start testing it there. But even in our first approaches in this arena, we were always conscious that at the end, it was never about sort of like the community aspect of it so much or the programming aspect, which was kind of like the batch there are a lot of co -living. companies were kind of like proudly wearing at that moment. For us as architects, as designers, we knew always that it was more about the convenience of it and the fact that it could be more accessible. So creating a space that was pleasant to live in was more important than creating a programming schedule. for people that inhabited this building in buildings. So we were part of kind of like writing that way. In fact, that is the reason that we met our third partner, Dane. Our approach was always from the design perspective. So in this process, we created our signature micro unit that was the element that caught the developer's attention and prompt them to work with us on several projects in New York. So any shift that happened after that, I will say it's more of an inevitable evolution of the product as we are on a continuous path to look for more efficient ways to make housing that is more affordable.
08:25
HANNAH: Yeah. So it sounds like the things that drew you to co -living, which were like the design and the architecture and like thinking about creating a space where people could live in a dignified, affordable way, is also then what drew you to the work that you're doing now with Madelon and less so like some of the excitement around co -living with like the programming and the events that those spaces could host. And so you sort of left that behind and continued to stay laser focused on this design aspect.
09:00
JOSEPH: Yeah, exactly. Yeah.
09:03
HANNAH: Gotcha. So I mentioned this in the beginning intro, but Madelon has a big focus on off -site construction and you've shared with me that in your first year you actually set up the the Madelon office next door to a prefab factory in New York. And it sounds like this was very intentional. You and your two co -founders wanted to learn about offsite. So tell me more about what that was like being in like a little trailer next door to a factory.
09:31
JOSEPH: - Yes, we were located in the Navy Yards. That was a very interesting experience. Prior to that, we were at ADO. this other kind of maker space also located in Brooklyn. And we were working in Casa Uno at that moment. So we started getting very interested in the pre -fact technologies. We knew of this building that was built in Brooklyn, in Atlantic. in Atlantic Avenue and this company, the factory that was in the Navy Yard was the one that built it. So we start, we engage with them, we started like telling them what is it that we wanted to do, what were our interests, none of that. So they were very welcoming to us and we, so we ended up asking them if we could have a, if they had any space that could, that they could lease to us for us to set office there, and they gave us this little 1 ,000 square foot trailer that they had attached to their factory, it was not big, but it was definitely bigger than the other spaces that we have passed through for at that point, five years of practice, it was definitely the bigger space that we have been into. And I just think that doing off -site requires a different sort of design approach that we were not familiar with. So for us, it was almost mandatory to be close to them and understand their processes. So when we were there, we had access to the factory floor. And back then, we were always also looking at some development deals in Brooklyn that we were trying to push for them to be prefabricated. So we were meeting with them almost like regularly to, again, understand the processes and start that change of mindset from my side. There's a lot of particularities that prefabricate, especially volumetric Prefab, entail. So being there was super helpful to understand these particularities and then from there we could go out and speak with other factories and almost like already speak their same language because we knew what the right approach was since the beginning. So that's why that's where we got to go. installed there and we actually took the advantage of that space and we did some design building ourselves in it. And it was a space where we could meet people from the industry and also host some like salon discussions that at the end were very valuable for us.
12:27
HANNAH: At this point, both of us have alluded to these two mysterious other co -founders that you have. So, you're a chief of... architecture, like I mentioned, Alfonso is the CEO and then Dane is the COO. I'm curious what it's been like having a co -founding team of three.
12:44
JOSEPH: What this works, I would say very well for us having that one more person to break the tie. Always helped us maintain our relationship and I would say take the best informed decisions on everything, no? I haven't. been working, but then when we formed Madeleine, I'd been working with Alfonso for like, I don't know, seven years, probably. And each one of us have different strengths, no? But also, at different points of viewing things. Mine was always more design -oriented. Alfonso had lots of experience. developing and building, but also values design a lot. That's why we could have sort of like, in many ways, speak the same language. They, on the other hand, had lots of experience in the operations side of housing. So he brought that other perspective that we very much needed was essential to help us develop that. the great products that we did. So having, in my perspective, working with them too and having their insights into everything was invaluable in developing also my own perspectives as well. So it has been a great experience and yeah, just having the three of us here. is, I think having three, it's always a good number because again, there's that one person to break the tie.
14:26
HANNAH: Yeah, I hadn't considered the tie rating element. I imagine that's really helpful when making big decisions.
14:31
Yeah, yeah. And at the end, it was not really agreements. He was just like, we're always breaking the tie, different points of view and a lot of like all of these points of view were valid, but yeah at the end it helped having one person to kind of like ground all of these points of views and and use.Yeah, use another criteria to to come to come to an agreement No, yeah on how we wanted to to drive the company company.
15:05
HANNAH: So I wanna shift to talking about the platform itself, which we haven't gotten into too much just yet. So when I first asked you about the platform, you said to me that you put your brains into the platform. So tell me what you mean by that.
15:23
JOSEPH: Yeah, that was actually a phrase that Dane always used that he put my brains into the platform. platform. So I think it's a platform that lets you analyze real estate projects in seconds. No, you talked about it at the beginning of the podcast. It provides an informed insight into a development deal. This is something that is done every day by real estate developers and real estate companies. That's what they do every day. They need to somehow be certain of their real estate assumptions. And they need to be certain if their assumptions are correct and that a deal works. But for them, this can take weeks, even with a-- or this can either take weeks or months or a bigger team and a lot of times both. So our CTO helped us codify not only our extensive experience that I mentioned before in the development and design of housing, but also public information that you find on public portals from cities, such as zoning codes, transportation maps, and other key aspects that may have an important impact on the development of housing. For example, government incentives, parking requirements, requirements. It has always been a back and forth between the platform and us, I use the information that I learned and the same products within the framework of my learnings. And then our CTO codifies that information and puts it on red tech. We test several sites with these assumptions and refine them, and voila, at the end of this exercise, any... anyone with an address can get an informed insight into a housing development deal and this is possible because we're putting all of this information both information that is of public access and that we have to interpret but also our experience as as designers in the in the creation of housing.
17:34
HANNAH: Mhm. So it sounds like you're integrating data from a bunch of different places, including your and Alfonso's own experience developing real estate, getting it all into one place and by doing so, saving customers, the folks that are actually building, housing a ton of time because they would otherwise have to go to a bunch of different sources together.
17:57
JOSEPH: Exactly, yeah, exactly.
18:00
HANNAH: Gotcha. Another phrase that you've that I've heard you all use in talking about the platform is this idea that Madelon is productizing development. Can you tell us what that looks like exactly?
18:14
JOSEPH: Yeah, so we create market specific products. Because in this industry, it's sort of weird to speak. speak about housing as a product, but we had to get into that mindset that what we were developing was something that was going to be able to be reproduced many times, because for us, creating more supply is one of the solutions to the housing. crisis that American cities are suffering right now. So what we do is that we study the local zoning and building and development loss of a certain location. We are in constant search for new legislations that incentivize the development of more affordable housing or just housing in general. So what we do is that we study the local zoning and building and development loss of a certain location. We are in constant search for new legislations that incentivize the development of more affordable housing or just housing in general. Many cities are having been on a quest in the past few years to provide solutions to that they will incentivize the creation of more housing because they have seen what having a lack of housing costs to them, though. Homelessness is a big, big, big problem in states like California, New York. and Colorado. So there's a lot of cities that are already kind of like have plans in place that are meant to solve this crisis. So we take this information, these legislations, and with all these elements we bring our design and expertise to create parks that can be deployed effectively. and at scale. By doing this, we simplify some of the key aspects of the development process, and this allows participants that had previously not had the chance to come into the arena, such as smaller developers or medium -sized developers, local institutions, non -profit organizations and communities to have a stake. stake at what it's developed in their areas. So this, when we say a product development, we want to say that we are kind of like creating a, I guess, opening the field to many other players that want to have a positive impact in their communities. communities And we do this by providing a lot of the information that they had previously that they previously didn't have access to for them to to to make an informed decision on that development.
21:08
HANNAH: So as part of that are you like standardizing the the kinds of housing products that you're Offering or proposing through the platform?
21:20
JOSEPH: Exactly. When you go into a platform, you just need to put an address. Of course, a developer will put an address and maybe other developer that has experience and knows the market will already know what kind of building they want. We have several products. Now we have our multi -family products which range with which has one bedroom unit, studios, two bedroom, three bedroom units. We, our platform can actually mix like the units to have as many, as many one bedroom units as you want, or as many as two bedroom units as you want. And we have the other, another product that we have is the the micro studios, which are all the same. Then we have our low -race product which is for buildings that are smaller, maybe up to four units, and then we have our ODU product which are basically even smaller micro studios that are kind of like accommodated within an apartment unit, so So for someone that doesn't know what to do, they just know they have a piece of land or they're interested in acquiring a piece of land to do some housing, we provide them with all of these options and we tell them this is our standard product, this is how many units you can do based on the zoning building code of the lot passed in that way. way, we provide them like how much they can get for rents, and then we also provide them. What are the other incentives that the governments do if you do this sort of product? How much parking you need for this? If you do less parking, how many more units you can have, but then how many of these units need to be dedicated to affordable housing? So, we promote that. all of this information for them to make an informed decision. So it's kind of like, yeah, giving the panoramic view of what other development deal is by just putting the address and using our standardized products.
23:43
HANNAH: Yeah, so it sounds like this feature would be really, really helpful for smaller developers, maybe that haven't done. a lot of projects and don't have the same kind of experience that a larger, more seasoned developer might have where they type in an address and know what they can /should sell and build there. So it makes it a lot easier. So I want to talk specifically about a project that you're working on right now in Northeast Los Angeles. I know this is something that you all are really excited about. I'll see you in a minute. So curious to just learn more about what's going on and why LA and just a bit more about what this project looks like.
24:23
JOSEPH: Yeah, we're super excited about this project. I actually love the scale of buildings. It's going to be one of the first projects in LA that uses the ADU law which that one passed a few years ago. That's all. long ago, but a few years ago, and then it's going to also combine it with the recently passed SB9 legislation that was passed last year to densify housing. Now, this is one of the attempts that I was saying earlier that states like California are taking to resolve the housing crisis. While we know that the lack of supply is one of is one of the aspects that has driven many American cities to their big housing problems that they currently have, we believe that there are many different ways to create more supply. It doesn't have to be in the form of massive developments, massive multifamily structures. There's actually other ways to do it. and we're very interested in the they call them missing middle housing spectrum which has for long been neglected so we created Madelon's low -rise product we are this product makes a lot of sense in California where two -thirds of its land that is dedicated for housing is sold for single fabric family. This means that in two -thirds of the residential lots that you have in the state you could previously only do one house, so for one family. With the ADU law that change you can actually do one extra small unit in the back, so that changes to two families. Then when they pass the SV9, you could actually split the lot, have one house on each lot, and then have an ADU, which ADU stands for Accessory Dwelling Unit, have one ADU in the back. So that already gave you four houses, though. So now you can house four houses in a lot that was originally meant to house one. You can house four families in a lot that was originally meant to house one. originally meant to house one family. So this product, we're very excited about this product and it makes sense that it's in LA. So this unlocks lots of potential. We're currently working on the first prototype of this in North East LA in Eagle Rock. It's completely under the site development. We have already speak to the city about what is it that we're trying to do and everything is set to go.
27:19
HANNAH: Wow, that's awesome. So it sounds like there's-- you've shared a lot of excitement around this project. You've also said that you are hoping this project can be kind of a prototype for future work, future types of projects that Madelon facilitates. And I know there's also a kind of environmental sustainability component. So I'm curious if you could talk about sustainability piece and how and why this can be a prototype for the future for Madelon.
27:47
JOSEPH: Right. Yeah, as I said, our early project is a four -unit development project on a single family lot. Now that itself is already impactful in terms of the collectivity. and sharing of resources that that entails. But we're really using this project also as a prototype to exercise more sustainable development practices. Literally from the foundations of this project, we are using greener building practices. We're looking into a low impact foundation system for the housing units. This is the system that you know grounds a unit and touches the soil, the natural soil. So we're looking into a technology that is actually much greener than just pouring concrete or other alternatives. While the housing units themselves are going to be built in mass timber, a building technology that is as sustainable as it gets. You cannot be more sustainable than the that, other than not building at all. (both laughs) And when it comes to building, must embrace as sustainable as it gets, especially if you work with master invert companies that, you know, practice responsible, you know, cutting off trees and all of that. And we were able to find a company that does that and is willing to do that. work at the scale of a project It's a technology that is rarely available for these these scale of projects This is just more mostly on at least like four level units and now they have in I know that in several states They have a proof Sky scrapers to be done in mass timber So it's it was kind of hard to find someone that was interested to to work at this scale but they understood that the scale can also be achieved across multiple sites, not only one bigger project though. So, as Madelon, we understand the importance of putting sustainability at the forefront of development and it is projects like this that allow us to test greener technology. while having an impact on the way people live. We're not doing this in a huge project that if a single thing goes wrong, like everything, it's a disaster. This scale allows us to test different things and while also run a risk at the end, it's not as risky as bigger buildings. So it makes sense for us that this is like that.
30:33
HANNAH: Yeah, and it's sounding like the project once completed will not only serve as a prototype for Madelon moving forward, but I think for sort of the missing middle movement in general with what infill development can look like, and especially with the sustainability component. So super exciting.I'm excited to see how the project progresses.
30:55
JOSEPH: Yeah. Yeah, yeah, me too. (both laugh)
30:58
HANNAH: So zooming out just a little bit from, you know, your time with Madelon so far, it's a startup, you know, it's been a journey, there's more to come. I'm just curious what would have been some of your biggest learnings or reflections thus far?
31:16
JOSEPH: Yeah, this is my sound as an overstatement but housing is so so important. I mean we should note that no especially as architects when you when you go to architecture school you don't realize the importance that this has in cities. I think it's a tool to measure how innovative a city is. If you want to know that look at their housing programs. It is something that needs to be done at the same time. It's something that needs to be done in conjunction with so many players. It cannot be done alone. Of course, there's the private sector that does housing, and it can have a positive impact in everything. But the fact is that we need so much housing in our cities that it needs to be a collective effort, at least in our cities. to have the impact that he needs to have at the scale that he needs to have. And I'm just not talking about affordable housing. I believe that housing needs to be met at every level. I believe that the bill that doesn't need to worry about housing, about having a roof over their head, or but also an individual that doesn't have to spend more than half of their salary on rent, or that needs to have work extra chips to make that rent, it's an individual that can go out into the community and achieve great things. So providing a solution for one of the most important needs of humans, I believe can unlock many other great things. And so, So, and again, that needs to be done at every level, not only at the affordable inspection of the housing market, but at any level because at the end, everyone contributes to, it's part of these communities and everyone collectively has to be house correctly in order to do, you know, good things for it.
33:27
HANNAH: Yeah, very well said. I couldn't agree more. So for folks that are listening and they are interested in Madelon and they want to get in touch, what's the best way for them to do that?
33:40
JOSEPH: You can go to our website and fill a contact form at MadelonGroup.com or send us an email at hello@madelongroup.com but even you can, I'm going to give you my personal email as well, Joseph, and that's J -O -S -E -P -H at madelongroup .com, hit me up and I'll be happy to get back to you.
34:09
HANNAH: Awesome, thank you so much Joseph, it was great to chat with you and learn more about the impact of Madelon, thank you so much.
34:16
JOSEPH: Thank you.Thank you, Hannah. This was great.
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