Modular Construction

The modular construction business in the U.S. has grown rapidly over the last five years, doubling in size to comprise an $8 billion industry (Modular Building Institute). The practice of modular construction is a lot like building with blocks— prefabricated building components are assembled in a factory and shipped to the job site for final construction. Up to 90 percent of construction can be done in a factory setting, theoretically offering countless benefits. Because in-factory modular construction can happen simultaneously with site work, modular construction can decrease construction time by 20-50 percent. While costs of modular and traditional construction are similar, developers are starting to favor modular's more efficient and predictable timelines as it allows them to begin earning returns on their investments quicker. Additionally, modular construction is independent of weather that can disrupt construction timelines, produces less waste than stick-built construction, and can be beneficial in high-cost labor markets. However, modular construction is an emerging technology — theoretical benefits are yet to prove themselves in practice. A 2019 JLL construction outlook reports modular construction delivers 0-5 percent savings rather than the expected 5-10 percent compared to traditional construction. Because modular requires standardization of design, it lends itself to chain hotels, office buildings, and senior housing more so than speciality buildings.