Look Who's Using Prefab - Key Markets for Offsite Construction

Nearly every construction project these days – whether commercial, residential, or industrial - has some degree or element of prefabrication involved.  Perhaps it is something as basic as roof trusses or HVAC ductwork, or more complex like entire volumetric room modules.  And nearly every market has utilized prefabrication to some extent. 

The most frequent building types forecasted to utilize prefabrication, according to a recent survey by Dodge Data & Analytics 2020, are:

Healthcare facilities - 82%

Hotels and motels – 74%

Multifamily – 71%

College Buildings and Dorms – 70%

Office Low Rise (1-4 stories) – 58%

Schools K-12 – 57%

Public Buildings – 51%

Commercial Warehouses – 50%

Manufacturing Buildings – 49%

Office High Rise (5+ stories) – 44%

Retail Stores – 37%

Many of these key market forecasts align well with the Modular Building Institute’s (MBI) annual report on commercial modular construction.  While educational facilities and low rise office buildings have traditionally been strong markets for volumetric modular construction, hotels, healthcare, and multifamily markets have made significant increases over the past four years. 

Improved project schedule performance is the most compelling reason owners and architects are turning to prefabrication.  The ability to simultaneously construction components of the building while working on the site and foundation has been demonstrated to shave months off a typical construction schedule.

Consider the following project at an initial construction cost of $10,000,000.  Assume the modular project is completed and ready to rent in eight months while the traditional project is ready in fourteen months.  A complex with 35 units rented at $2,500/month with an occupancy rate of 90 percent would generate $78,750 in monthly rental income. All other expenses—including taxes, insurance, and maintenance—remaining equal, the modular project would generate an additional $472,500 in revenue for the owner due to earlier occupancy.  This “front-end” early revenue might tip the scales in favor of a project on a pro-forma basis.

And it is this shortened schedule that makes all the difference. Any facility type that generates revenue for its owner should consider the advantages of a shortened construction schedule, as quicker occupancy means quicker return on investment.