Is Modular Construction Becoming Mainstream?

Live Life on Your Terms With Real Estate Investing

Buy It, Rent It, Profit brings together education, tools, and a community of more than 50,000 members—all in one place. Learn about investment strategies, analyze properties, connect with an investor-friendly network, and more.

For a long time, modular construction was hardly ever considered a good way to build houses. Now, with the increase in multifamily home construction, developers may be finally about to embrace modular construction.

“Something of a perfect storm may be forming that changes the equation for modular construction,” says Rick Haughey, vice president of industry technology initiatives for the National Multifamily Housing Council (NMHC).

Modular construction is a prefabricated construction process where large features of a building are created in a factory and then transported to the job site where they are put together to build a structure, like a home, apartment, or office building. Modular construction can significantly decrease the time it takes to build a structure, which means it also reduces the cost of a building.

According to FMI’s 2013 Prefabrication and Modular in Construction Survey, 40% of contractors thought that their prefab and modular construction capabilities were a part of their company’s strategic initiative. With the way the process is gaining popularity, they are certainly right.

Modular construction for commercial, or multifamily, housing was used to build 3.02% in 2016, which was up from 2.32% in 2015.

“We are still looking at the 2017 data, but expect it to increase,” says Tom Hardiman, executive director of MBI.

According to PR Newswire, America is the second largest region for the modular construction market, following Europe at number one. The North American modular construction market is driven by factors like consumer preference for eco-friendly buildings and sustained investments in commercial real estate.

North America accounted for the market share of 27.6% in 2016 in the modular construction market. This market value was $28.7 million American dollars, and it is projected to grow 5.69% during the next five years.

“While modular construction has seen wide acceptance in other countries, it has struggled to gain mainstream acceptance in the United States,” says NMHC’s Haughey. “Several major apartment developers have experimented with it, with mixed results.”

The New York City Department of Housing Preservation and Development is already taking the initiative to grow modular construction and began a formal process that could lead to a large-scale modular program.

This article contains general information and does not contain legal advice. Buy It, Rent It, Profit is not a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


Downloadable Investor's Guide

This A-Z Investing Guide will help you master in minutes the most commonly used industry terms in Real Estate Finance, Syndication, Corporate Entities, Tax Structures and much more!

  • This field is for validation purposes and should be left unchanged.

Year End Holiday Sale:

Get 20% Off All Memberships or Coaching Programs

Sorry the sale is over. See you next time!