Modular construction is often faster and more efficient than traditional construction. The reason, of course, is that modules are constructed in a controlled factory environment, which means fewer weather delays and other disruptions to the schedule.
More and more builders and developers are coming to realize these advantages. In fact, many industry observers predict that growing demand for new homes and buildings has the potential to nearly double the output of the country’s modular factories over the next 10 years. The question is whether there will be enough manufacturing capacity to meet that demand.
So far that hasn’t been the case. Although some startup companies have opened new modular factories, there have been too few of them. And the expansion of existing companies — either by opening new factories or expanding existing ones — has so far been almost negligible.
There are a couple of reasons for this.
First, modular construction is still relatively new. It has only been around in its present form for a few decades and it is not yet as well known or understood as traditional construction. This means that there is a relatively small pool of potential investors for modular factories.
Second, a modular factory requires a significant upfront investment. Factories are expensive to build, and they require specialized equipment and a skilled workforce that’s familiar with the technology and the processes involved. These skills can be a challenge to find in some areas.
The cost of starting a modular factory can vary depending on factors that include its size, the type of equipment used and the location. A typical new factory can cost anywhere from $5 million to $50 million.
The cost of the land and buildings will be the largest initial expense, followed by the equipment. The cost of the equipment will vary depending on the type of modular buildings that the factory will be producing.
Factory location will also affect what it costs to build. A factory located in a major metropolitan area will be more expensive than one in a rural area. This is because the cost of land and labor is higher in metropolitan areas.
However, even with these obstacles, as the industry matures and more people become aware of the benefits of modular construction, I predict that we will see more modular factories.
One area of immediate growth is the market for Auxiliary Dwelling Units (ADU). The ADU market is a good fit for a modular factory because the factory can produce high-quality units more quickly and efficiently than a site builder can. In the future, we can expect to see more modular factories opening to meet the growing demand for ADUs.
The bottom line is that demand for modular construction is growing as a percentage of the of the overall construction market. The only way to keep up with that demand is to build more factories. Let’s hope that happens more quickly.
