Each week, mysterious white plastic-wrapped boxes seem to multiply in storage yards scattered around Vallejo’s Mare Island.

On this bustling industrial site, with dry docks and warehouses, the boxes don’t look like much — they could be any cargo waiting to be trucked away. But to developers on the front lines of the Bay Area’s housing crisis, they are one answer to the question of how to make home building faster and less costly.

That’s because the stacked boxes are actually 317 completed housing units built at Mare Island’s Factory OS, a modular housing plant that opened in early 2018. Workers assembled the units into modules with walls, fixtures, floors — nearly every detail — constructed on an assembly line at the Vallejo factory.

The modules will next be trucked on flatbeds to three East Bay sites, two in West Oakland and one in Emeryville, where workers will stack them and add the final touches, such as a roof and stairs, and connect the units to city plumbing and electrical systems.

Now, Factory OS is expanding beyond its original 265,000-square-foot plant. It plans to open a new factory early next year at a nearby 107,000-square-foot warehouse. Financial services giant Citi and software maker Autodesk are investing an undisclosed amount into the company, which will help fund the new plant.

As construction costs in the Bay Area keep rising — San Francisco’s are the highest in the country — interest in modular construction has grown. Developers hope it can be a cheaper and faster alternative to building a structure on-site, called stick construction.

The idea is that if builders can deliver homes faster and for less money, they may be able to bring down Bay Area rents and home prices, which are now out of reach for many. Modular construction has the potential to save a renter $338 a month on a 900-square-foot Bay Area apartment project, according to a 2017 report from the Terner Center for Housing Innovation at UC Berkeley.

Demand for modular construction has far exceeded expectations, said Factory OS Chief Operating Officer Larry Pace. The company gets roughly 30 calls a week from potential customers, he said, adding that developers representing 40,000 units have approached the company. Google, for example, has ordered 300 units for its workers in Mountain View.

“There is such a desperate need — it has absolutely shocked me how deep the need is,” Pace said. “The current marketplace, the cost of construction, none of that stuff is sustainable.”

Factory OS is approaching its maximum output of 1,000 modules a year, which could translate into 2,000 studios, 1,500 one-bedrooms or 1,000 two-bedrooms, he added.

All of Factory OS’ projects so far have been rentals, but the units are designed and built to allow for conversion to condominiums in the future, CEO Rick Holliday said.

The factory runs two shifts a day, with workers cranking out modules until 11 at night.

Modular construction is booming in Northern California beyond Factory OS. RAD Urban of Oakland is producing housing at its facility in Lathrop (San Joaquin County) and building a half-dozen projects in Oakland and Berkeley.

Katerra of Menlo Park is building a 500,000-square-foot modular factory in Tracy that will be able to produce as many as 12,000 units a year, said Steve Weilbach, head of sales. Katerra, which has raised more than $1 billion from investors, is also opening factories in Texas and Washington state.

“The factory is built, the manufacturing equipment is in, and we are going through product and safety testing,” Weilbach said.

The first project to roll off the assembly line in Tracy will be a 97-unit development a half mile from the South Hayward BART Station.

While some construction industry watchers are skeptical about whether modular really saves money, Holliday said the early results are positive.

The units for a project in El Cerrito, for example, cost $300,000 each, about $100,000 a unit less than with conventional building.

“At $400,000 a unit, that project is not feasible,” Holliday said. “At $300,000 it is.”

Not only is modular potentially cheaper, it can go up faster. A typical modular project is built in half the time it takes to build with stick construction and at 20% less cost, according to a 2017 study by the Terner Center for Housing Innovation at UC Berkeley.

More Information 50% Potential time savings for modular construction compared with traditional methods 20% Potential cost savings for modular construction compared with traditional methods 1,000 Number of modules that Factory OS is approaching producing annually, which translates into 2,000 studios 1,000 Number of supportive housing units that Factory OS expects to produce in a year at its new factory, which is expected to open in early 2020 $338 Potential monthly savings to a renter if a 900-square-foot Bay Area apartment project were built using modular construction Sources: Factory OS, Terner Center for Housing Innovation at UC Berkeley 2017 report

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But there are complications for developers who want to use modular construction. In San Francisco, where the housing crisis is most severe, trade unions have most fiercely objected to modular construction, which reduces work for their members.

Factory OS is staffed with union carpenters, but some of the work they do would typically be done on site by other trade groups. So far the three San Francisco projects that are in the Factory OS pipeline are all supportive units for the formerly homeless. Some building trades representatives have indicated that they will not object to modular being used for that type of job.

Holliday said the company would like to build San Francisco projects, but there is plenty of work elsewhere in the Bay Area.

“The San Francisco market will not make or break the factory,” he said.

While the Factory OS project mix has been split evenly between market-rate and affordable housing, the second facility will be focused on studios for formerly homeless people. Pace said it should be running by February and within 12 months it should be pumping out 1,000 supportive housing units a year. Holliday has spoken to local and state officials about the plan.

Because the units will be smaller and more uniform, the process will probably be more efficient, Holliday said.

“The state needs 250,000 supportive units. If we got good at it, we could do 4,000 a year,” he said. “We’ve got to go faster and be more aggressive.”

As Holliday works on the plant expansion, he’s also getting ready to finish the factory’s first project, the 102-unit Union at 532 Union St. in West Oakland. The modules will be placed on the foundation in mid-August. The first residents to live there will start moving in next year.

Holliday said: “2019 has been about building the boxes, and 2020 will be about finishing the projects.”

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen