Modular Building Institute
Modular Building Institute





Summary of Permanent Modular Construction for Year-End 2017

MBI estimates that there are approximately 252 North American modular manufacturers engaged in the commercial building market. This includes companies that are primarily engaged in single-family modular home production but also do some percent of multi-family and light commercial work. This also includes container modification or fabrication manufacturers, which were not included in last year’s report. MBI obtained revenue and production data from 45 of these companies for this report, seven of which were classified as container fabricators.


Key Markets

Permanent modular buildings are considered real property, built to the same building codes and requirements as site-built structures, and are depreciated in a similar manner. As such, the markets for permanent modular construction are like the markets for site-built contractors, with few exceptions. MBI has identified the following key markets for PMC in North America:


Multi-family Housing


Modular construction offers the ability to provide condominiums, apartments, student dorms, and workforce accommodations in about half the time as traditional, site-built construction methods. More cities like New York City and San Francisco, as well as countries like England, Singapore, and Hong Kong are turning to modular construction to address chronic housing shortages as costs continue to soar to unattainable levels and reliable labor remains scarce.


Hospitality/Hotels


A shorter construction schedule means quicker occupancy for owners, and that means guests checking in months earlier than with convention construction methods. It should come as no surprise that companies like Marriott Corporation have made modular construction part of their strategic plan.


Education


From single classrooms to complete campuses, modular construction offers public, private, and charter schools what other construction methods cannot: accelerated project timelines, more economical pricing, and less site disruption. Permanent modular schools are indistinguishable from other schools and can be constructed to any architectural and customer specifications. MBI members design and build schools of all types and sizes using traditional building materials such as wood, steel, and concrete. Virtually any size permanent school can be built, installed, and ready for occupancy in as little as 90 days. Perhaps most importantly, using off-site technology, open construction sites are eliminated while school is in session. Students are safer, and teachers can compete with less disruption.


Office and Administrative

Permanent modular buildings serve as corporate headquarters, satellite bureaus, institutional and administrative buildings, and offices for all business types. Modern single- and multi-story buildings can be configured in several ways to include independent offices, conference rooms, elegant lobbies, kitchens, restrooms, and large open spaces for cubicles or other partition systems. MBI members have architectural and engineering designs for workspace planning, storm water management, landscaping, parking, and zoned heating and air conditioning. If it is time to capitalize on company growth, modular construction offers a fast, economical approach.


Healthcare


Many hospitals and healthcare facility contractors are turning to modular, primarily for building components such as bathroom pods and headwalls. However, entire hospitals have been constructed utilizing modular construction techniques. Modular construction offers quiet, safe, and clean applications for medical, surgical, clinical and dental use.


The insight MBI contractors have from designing and building thousands of medical facilities has resulted in satisfied healthcare professionals the world over. If an organization or community needs a new rehabilitation clinic, emergency room, operating room, hospital extension, laboratory, diagnostic center, or other medical facility, remember that modular construction can be used for custom-built facilities with the tightest budgets while maintaining strict medical and aesthetic specifications.


Commercial & Retail


Simply put, quicker occupancy equals quicker return on investment. Modular construction is accelerated construction. Why is this so important to banks, restaurants, convenience stores, childcare centers, and other retail establishments? Because earlier occupancy means a customer generates revenue faster. In fact, it’s not uncommon for many modular buildings to be up and running in as little as 24 hours—an important consideration for retailers of all types.


Typical retail applications include restaurants and diners, banks, golf pro shops, convenience stores, gas stations, car washes, and concession stands, to name a few. MBI contractors provide a full array of services including site, mechanical, and electrical work. Customers can accommodate their emerging business with modular buildings customized to their financial needs, space requirements, and deadlines.


Institutional & Assembly


This market includes police and fire stations, prisons, and facilities used for assembly such as churches. While not a large market overall, some modular companies specialize in these markets.


Statistics

MBI obtained revenue data from 45 modular manufacturers including seven companies primarily engaged in modifying shipping containers into buildings. The average revenue among all manufacturers in 2017 was $14.2 million, down from the $15.5 million in the prior year. Among the seven container companies, average revenue was $2.3 million, while the average of the 38 remaining commercial modular manufacturers in this dataset was $18.3 million. The industry generated nearly four billion dollars in revenue and drove over seven billion dollars in construction activity for year-end 2017.


MBI further analyzed 41 permanent modular construction (PMC) projects completed in 2017 in key markets (six in institutional, 13 in education, three in office, six in retail, three in healthcare, and 10 in housing/hospitality which included three hotels).


The average size of these projects was 24,087 sq ft across all markets with an average of 169 days to complete from the start of factory production until occupancy. For the hospitality market, the average size project was 68,210 sq ft. with an average of 207 days to complete.


Of the 41 projects reviewed, no project exceeded a one-year construction schedule from start to occupancy. While the retail projects were on the lower end of square footage completed per day ratio, the projects were completed in about three months from start to finish.


Summary

Without a doubt, the interest level for modular construction has increased over the past year, driven largely by a lack of skilled labor and high housing costs. MBI has compiled comprehensive data and analysis on the North American commercial modular market including regional production and capacity, market share by segments, design considerations, market drivers, the approval process, and definitions.


Overall market share for commercial modular construction increased slightly from 3.18% for 2016 to 3.27% in 2017.


Additional information about the North American commercial modular construction industry, including regional analysis, can be obtained in MBI’s PMC Annual Report available at modular.org.



Market Average Size Average Days to Complete
Multi-family 71,859 166
Hotel/Hospitality 68,210 207
Education 14,539 161
Retail 3,180 95
Office 5,181 119
Institutional/Assembly 7,021 174

This article originally appeared in the Modular Advantage Magazine - Third Quarter 2018 released in September 2018.



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