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    • Home
    • Practice Areas
    • Construction Law
    • Construction Mediation
    • Cost
    • J. Don Overton
    • Faq
      • Arbitration Awards
      • Arkansas Lien Law
      • Business Collections
      • Deposition FAQ
      • Eminent Domain FAQ
      • Mediation FAQ
    • Built 2 Rent & Apartments
    • Off Site Construction
      • Top 10 Reasons 4 Off Site
      • 2020 - Modular Growth
      • McKinsey Report FAQs
  • Home
  • Practice Areas
  • Construction Law
  • Construction Mediation
  • Cost
  • J. Don Overton
  • Faq
    • Arbitration Awards
    • Arkansas Lien Law
    • Business Collections
    • Deposition FAQ
    • Eminent Domain FAQ
    • Mediation FAQ
  • Built 2 Rent & Apartments
  • Off Site Construction
    • Top 10 Reasons 4 Off Site
    • 2020 - Modular Growth
    • McKinsey Report FAQs

The Overton Firm

The Overton FirmThe Overton FirmThe Overton Firm

CONSTRUCTION, REAL ESTATE, HOSPITALITY, SMALL BUSINESS & TAX LAW

CONSTRUCTION, REAL ESTATE, HOSPITALITY, SMALL BUSINESS & TAX LAW CONSTRUCTION, REAL ESTATE, HOSPITALITY, SMALL BUSINESS & TAX LAW

2020 Trend: The Continued Growth of Modular Construction

Modular construction was once a cheap  solution for properties in lower-priced areas. That has slowly changed  over the last several years as some of the biggest companies in the  burgeoning proptech and construction tech spaces have focused on modular  and prefab builds. Modular construction is now used in a variety of  high-end commercial real estate projects. 


In fact, the modular construction market is projected to reach as high as $157 billion by 2023.  New  York City is quickly becoming a home for some of the most ambitious  modular hotels in the world, including the 168-room, 26-story AC  Marriott in Manhattan, which will open in 2020. That hotel and a  proposed Hilton Motto in Brooklyn were designed by Danny Forster &  Architecture, a firm that also worked on Hudson Yards and other  high-profile projects.


Interest in modular construction can be  seen around the world. It is currently more popular in Europe than in  the United States, but the U.S. is starting to catch up. High-profile  tech start-ups like Katerra, which has raised billions from the SoftBank Vision Fund, have helped contribute to growing  awareness of modular construction as a way to help builders save both  time and money.


What is modular construction?

Modular  construction is a way of building more quickly through the use of  modules, which are constructed in a factory and assembled on-site. The  type of module can vary from entire houses or apartments to walls that  can be used to create larger components. Modular projects can use a  variety of different types of modules or just one type, depending on the  project. Full units, also called volumetric or 3D modules, can be  linked together, such as in the hotel projects described above, while  panel-style or 2D modules are increasingly being used to build out  offices, industrial spaces, and anywhere with a more open floor plan.


The upside of modular

Modular construction has some key benefits:


Faster builds

In  general, modular construction tends to happen far more quickly than  traditional stick-built construction. The modules are built at a  factory, and so delays due to weather are not a factor. A modular  factory can turn out units year-round in any weather conditions and can  add multiple shifts to increase production. A report from McKinsey &  Company stated that modular construction can decrease construction time  by as much as 50%.

Also, once the individual pieces are brought  to the site, they can often be assembled relatively quickly. This can be  very valuable in situations where slow construction could result in  road closures. For example, when Rockefeller University expanded its  campus in 2016, it used 19 modules that were shipped in overnight,  reducing the construction time by 14 months and the total costs by $20  million.


Less construction waste

Because the modules are  fabricated in a factory, it is easier and more cost-effective to recycle  materials. As much as 40% of landfill waste currently comes from  construction, and modular construction can help reduce this. If a  building needs to be expanded, more modules can be added, and if a  building needs to be removed, modules can be taken apart and repurposed.


A solution for multifamily issues

The need for affordable housing is leading to a variety of changes around the country. One of them is  updates in zoning to allow for more multifamily homes and to put  accessory dwelling units (ADUs) on properties. Modular builds can work  for both of these situations. In Oakland, California, Factory_OS put up a  five-story building with 110 units in just 11 days. Because these  projects go up faster and are less expensive, cost savings can be passed  on to buyers or renters.

The downside of modular

Modular construction isn't a panacea for all of construction's woes. There are a few major downsides:

  • Trucking in modules and moving them into place can be a complicated endeavor.
  • Shipping modules long distances can be problematic.
  • Modular construction is customizable to some extent but is not as adaptable as stick-built projects.
  • Depending on zoning, modular construction may not be feasible in all areas.

While  modular has come a long way from the techniques of earlier eras, there  are concerns that modular construction will lose value over time. For  this reason, financing can sometimes be more complicated. For large  projects using 3D modules, allowances also have to be made for the fact  that, unlike stick-built construction, the individual units may not have  shared walls, adding to the size of the building.

The future of modular construction

Modular  construction is constantly evolving as new technology is fueling  innovation. Factories are becoming more efficient and using artificial  intelligence and robotics to create modules with more speed and  precision than ever before. While the industry is still going through  growing pains, it's safe to stay that modular construction will play a  role in commercial real estate for years to come.


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