Modular homes and buildings are those constructed of individual prefabricated sections and joined together rather than built on-site. Usually, the sections are put together in a factory and then shipped to the site where they will be used.

For many years, modular buildings, whether residential or commercial, were not customer favorites. People attributed more character and more status to an individually built home. Modular buildings, if considered, were thought of as slightly down market. For homes particularly, they were thought of more as an inexpensive stopgap rather than the place customers were going to put down roots. An individually built commercial building also enjoyed a perceived higher status than a modular one and, depending on architect and location, had a chance of being an area landmark.

Recently, however, modular applications in real estate are becoming increasingly popular. Nearly all architects, engineers and contractors use them, at least some of the time. They are hailed as providing affordable housing in larger areas where housing has become unaffordable to all but the very wealthy. Several years ago, for example, New York City’s Carmel Place, the first micro-modular housing project in the city, was constructed to great acclaim.

They are also extolled for providing flexibility. Dormitories at Yale University, for example, are made modular because it allows for more flexibility in making the buildings larger, smaller or converting them into uses other than living spaces if the institution’s needs change.

Finally, they are attractive! Gone are the days when modular homes were as characterless as motor homes. Developments like Carmel Place and architect Moshe Safdie’s Habitat 67 in Montreal, Canada — one of the earliest modular developments — are routinely cited as examples of architecture that is both beautiful and functional.

The Homeowner’s Choice

Homeowners have a very large choice of attractive homes if they choose modular construction. Builders offer everything from Cape Cod homes to colonials to ranch houses. Modular homes are also very customizable, so any fear that modular homes suffer from cookie-cutter conformity is also a thing of the past.

Modular construction is also increasingly popular for home construction because, as real estate prices rise steeply in many places across the country, it is less expensive to construct modular homes than to build a house on site.

There are several reasons why residential modular construction is less expensive.

First, modular homes are generally constructed in factories. The individual units are made there, and the assembly of the house is done there as well. The completed house is trucked to a site and put in place. It is less expensive to build a home in a factory than on-site because the work process is quicker and more streamlined. A modular home saves 20 percent to 30 percent on costs.

Second, the time to completion is much quicker — 20 percent to 30 percent speedier, according to some estimates — again, because of the factory construction. Modular construction is not likely to be held up by inclement weather in the way building on-site can be. Construction projects are notorious for taking much longer than planned, and weather is one reason why. Weather is almost eliminated as a factor when homes are constructed in factories.

Third, builders receive their return on investment much more quickly. This is a function of the expedited time to completion as well. If a project takes only a fraction of the time of an on-site project, homes are available to be sold much more quickly.  

In addition to attractiveness and expense, modular residential building is greener and cuts down on pollution. The building process itself, in which a building is constructed in a factory rather than on site, cuts down on air pollution from construction stalwarts like trucks and cement mixers. In fact, 77 percent of construction companies reported reduced waste on a construction site with modular building. In addition, modular units are easier to recycle and thus inherently green.

Finally, residential modular homes are flexible. They can be expanded as a family has children or decides to take in an aging parent. With more and more of the population in the U.S. aging, the flexibility is increasingly an attraction to potential customers.

Commercial Applications Rising

Commercial enterprises are finding modular buildings appealing just as much as residential customers are. The beauty and customizability of commercial modular buildings have overcome any past prejudice against the look.

In addition, the expense factors that apply to residential construction — 20 percent to 30 percent lower costs and 20 percent to 30 percent less time to completion — are all present in commercial building as well.

The fact that return on investment can be achieved quicker is even more important perhaps in commercial construction, where multiple tenants can begin paying rent once the modular building is done.

Commercial tenants, like residential ones, are increasingly looking at environmentally conscious buildings as more desirable. The green characteristics of modular buildings will be attractive to commercial builders. In addition, the scale of commercial buildings may mean that factory-constructed homes will be able to emphasize green sourcing more going forward.

Finally, the flexibility is important to commercial tenants as well. In certain situations, like extremely cold climates, the time to completion is a consideration not only of costs but of getting the building completed before it is too late to do it in the season! On unusual lots or configurations, too, the flexibility of modular building can help a business stay open rather than shutting for the duration of construction. A modular unit can be headquarters, for example, as a new building is being built across from the old.

Modular real estate applications are an idea whose time has come. They are attractive, relatively inexpensive, environmentally conscious and flexible. It is likely that modular buildings will be rising as a percentage of buildings overall in the future.