The Commercial Inspector | Piece by Piece: Modular Construction’s

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Piece by Piece: Modular Construction’s Continued Growth in CRE

 June 23, 2021 |  Maintenance, Investment, CRE News |  apartment, real estate trends, building renovation, multi-family property, hotel

There’s no denying how popular modular construction has been in the housing market. Modular construction saves time, money, and decreases waste caused by building materials. Now, commercial real estate is realizing the benefits and applying the method to larger projects. So just how big can the sector get?

Modular construction makes it across the Atlantic.
Much like mass timber and 3D printing, modular CRE construction found its roots in Europe. Within the last few years, it’s made the trip to the United States and Canada and picked up momentum from there. Large cities from New York to San Francisco are realizing how much easier modular construction makes it to keep up with the high demand of housing. Even off-coast markets like Colorado are experimenting with the effectiveness of modular construction. This goes to show that the process isn’t stuck to certain locations and can be easily adapted.

Bringing the process into the digital age.
The adaptability of modular construction doesn’t just stop at cities. With so much of the world going online, it’s only natural that the construction industry follows suit. Sharing designs digitally could greatly enhance the building process and make it easier for contractors and fabricators. If one builder needs a part similar to another, being able to send schematics back and forth cuts down on wait time. The original designer would trademark their design and perhaps charge a small transaction fee. It may still be some time before this aspect of modular construction comes to fruition, but it’s certainly an exciting development.

Modular builds look to improve on what traditional ones lack.
Time along with money are the two biggest benefits that come with modular construction. Quickly assembling multiple sections that are close in design shaves days off the total build time. Labor and supply costs are also greatly reduced. Since the majority of units can be built in a warehouse or factory, bad weather is almost a non-factor in construction. Building in a factory also allows for easier collection and recycling of waste to reduce a project’s carbon footprint. When it comes to affordable multifamily housing, modular properties’ low price point and quick accommodation ability could be a solution.

There are still apprehensions surrounding modular construction.
A handful of challenges are to blame for the slow growth of modular construction. Many believe it has to do with the name of the technique itself. People tend to associate “mod” or “pre-fab” with cheaper, lower-quality properties. This can make contractors and future tenants alike steer clear. The type of project also plays a huge role into how well-suited it is for modular. Builds like healthcare, hotels, apartments, and even student housing are uniform between sections. However office buildings, warehouses, and malls require more variation and don’t work as well. And while there’s less waste involved, it’s not uncommon for components to become held up in shipping, especially if it’s being imported from another country.

Modular construction has a bright future, but must grow to remain viable in CRE.
Modular construction has a lot to offer, however it’s not quite off the ground yet. The hesitation around the quality of the product and logistics has turned away would-be adopters. As more builds go up it’s possible they’ll come around, but only time will tell. It’ll be a lot of trial and error to iron out the wrinkles, yet it’s likely that within the next decade we could see more modular builds. In an effort to cut costs and become more eco-friendly, modular construction is yet another optimistic alternative.

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