Permanent modular construction has flourished in Europe for the past two decades, and it is now increasingly emerging as a project delivery system in the United States.  It has also begun to attract interest from owners of large commercial projects after several recent high profile projects.  The appeal of modular construction is simple: it can reduce costs and improve project delivery times.  These advantages are particularly valuable for commercial projects, since they allow owners to reduce construction costs and achieve a faster return on investment by putting a building into service earlier.

Permanent modular construction (PMC) refers to structures where building components or the entire building are built off-site and then delivered for assembly.  With PMC, the majority of construction – usually 80 to 95% – occurs off-site in a factory or fabrication yard where the modules are pre-assembled.  The modules are delivered to the site and moved into place by crane.  PMC is comparable to traditional site-built construction, since it is subject to the same permitting and building code requirements.  It has been successfully used for multi-family residential buildings, schools, health care buildings, government buildings, and hotels.  Three to four years ago, PMC represented only 25% of the market share of the modular industry in the U.S.  It now accounts for 50% of market share.

PMC has a number of advantages over traditional construction, including:

  • a streamlined construction schedule, since site development, foundation pouring, and utility connection may take place on-site while building construction occurs at the plant 
  • increased efficiency and reduced costs, since it moves work from low-efficiency, high-cost field environments to more efficient, lower-cost fabrication yards 
  • reduced construction waste through recycling materials, controlling inventory, and protecting building materials from weather 
  • lower risk of weather-related delays, since 60 to 95% of construction is completed in a controlled factory environment 

These advantages are not merely theoretical, since studies have shown advantages in project delivery times and cost.  For example, a 2015 study conducted by the Modular Building Institute and the University of Utah College of Architecture’s Integrated Technology in Architecture Center found that use of PMC resulted in an average 16% savings on cost and a 45% schedule savings.  With these available savings in time and cost, modular construction will only continue to grow as a project delivery system.

461 Dean

Several recent projects highlight the advantages of permanent modular construction.  For example, Forest City Ratner Company recently completed 461 Dean, a 32-story apartment complex with 363 units in Brooklyn, which is now the world’s tallest modular tower.  Forest City built 90% of 461 Dean in a factory at the Brooklyn Navy Yard before the pre-fabricated modules were placed by crane to create the building.  According to Forest City, this allowed savings of 20% of construction costs.  Moreover, 461 Dean proved that modular construction can deliver a finished building as attractive as conventional construction and as appealing to consumers.  461 Dean contains 181 affordable housing units.  Prior to opening, the developer received over 84,000 prospective applications for the units.

AC Hotel

Large hotel chains are also embracing the potential advantages of modular construction.  Marriott International is constructing (or has constructed) four hotels as part of its modular construction initiative in Oklahoma City, Oklahoma,  Louisville, Kentucky, Chapel Hill, North Carolina, and Pullman, Washington.  These hotels were constructed using traditional construction for the first floors while the top floors consist of modular units.  According to Marriott, this dramatically lowered construction time and costs.  For example, at the AC Hotel in Oklahoma City, modular production began in June 2016 and the modules were installed by the end of December 2016.  The hotel is expected to open this month.  These buildings are likely the first of many Marriott hotels to be constructed using modular construction as a project delivery system.  On May 1, 2017, Marriott unveiled a comprehensive expansion to its modular initiative, announcing that it expects to sign 50 hotel deals in 2017 that incorporate modular guest rooms or bathrooms.

If you have any questions regarding modular construction or other construction delivery systems, call us at 864-327-5000.  We would be glad to help you.

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