Naomi Porat, ZETA's cofounder and former president, sees prefab as "ideal for zero lot line urban infill conditions… off-site construction is inherently efficient by generating 80 percent less construction waste and reducing construction time by more than 50 percent." Another bonus, in the case of the Harriet Street project, was that off-site construction minimized disruption to the surrounding dense neighborhood during the accelerated construction process, "which is key to securing permits without neighborhood permits," says Porat.

Asked to elaborate on the trends driving their experiment with micro-unit living, Porat says:

"There is a significant mind-shift in urban dwellers, who are trading physical living space for connection and shared social spaces within the larger city environment. Efficiently designed smaller dwelling units, sites in the urban core, proximity to public transit, and networked residential development are the now the hottest amenities in the market. These trends are driven by pure economics and technological advancements. Smaller, energy-efficient residential units allow urban dwellers to spend less on housing. Mobile devices are dramatically reducing the need for physical space dedicated to technology. And major shifts in office environments, especially in the tech sector, provide employees with the kitchen, living room, and social space to spend longer time in the workplace. These factors will fundamentally change design for residential and commercial development in the future."

Here's a look at how the project came together in Zeta's factory in Sacramento and on site. For more, click through the slideshow.