Courtesy Greystar
Modular construction often faces the misconception that it is inflexible and only suited for simplistic, standardized design. However, Andy Mest, managing director for Modern Living Solutions, says alignment from the design to site-work process can deliver customizable, design-conscious spaces.
Modular construction offers an enticing value proposition: faster timelines, reduced labor costs, repeatability, and a greater sense of quality control. Developing technologies allow modular buildings to be built bigger, taller, and in more designs than previously possible.
However, modular construction’s market share has remained in the single digits. According to the Modular Building Institute’s (MBI) 2024 annual industry report, modular construction represented 6.64% of new construction starts in 2023, up from 3.58% in 2019. At the sector level, multifamily construction accounted for 20% of modular starts in 2023. Many companies have come and gone in the prefab space across the single-family, multifamily, and commercial sectors. The high-profile failures of several ventures—including Katerra—have also made the essential capital-raising environment in the modular space more difficult.
Capital investment is essential not just for building modular plants and equipping them with advanced machinery, but also for developing integrated systems to run those plants. Without a steady pipeline of projects, however, even significant investment can fail to make modular operations economically viable.
“Modular isn’t just traditional construction in a different location—it’s a completely different delivery model,” says Nate Arnold, president of Z Modular, a division of steel pipe and tube manufacturer Zekelman Industries. “To do it right, you need experienced professionals who understand every phase of modular: from design and engineering to manufacturing, logistics, and final assembly.”
Companies also face hurdles with zoning and code restrictions from state and local agencies unfamiliar with the modular process and how to apply building codes to modular projects.
“To overcome these [deterrents], developers must prioritize modular early, involve all stakeholders—including code officials—and use real project data to demonstrate time and cost savings,” says Mitch Sklar, director of manufacturing quality at Resia Manufacturing.
The most profound way to overcome the narratives surrounding the modular industry is completed projects. Sklar and Andy Mest, managing director of Modern Living Solutions, the modular division of Greystar, say every successful installation and outcome builds more confidence and helps reshape the perceptions of the modular industry.
For Resia, successful projects in Florida have also allowed the manufacturer to add more than 20 new quality control checkpoints in the process between design, factory, and field teams, delivering measurable gains in quality, coordination, and speed.
The successful projects can also be used to dispel another common argument made against modular construction: The designs are simplistic, and aesthetic choices are limited.
“Take a look around. How many site-built apartments do you see that aren’t rectangular or box-shaped? Not many,” says Arnold. “That’s not a modular limitation—that’s a reflection of real-world constraints like budgets, zoning, and the fundamental need to build efficiently and deliver housing people can afford.”
“If someone’s priority is building a one-of-a-kind architectural sculpture, modular might not be the right fit, and that’s OK,” Arnold continues. “But if the goal is to house people faster, better, and more efficiently, we’ve got the right model.”
John McMullen, marketing director at the MBI, says modular is more widely used now than five years ago, and “it’s only a matter of time before all the benefits of modular construction are fully understood.”
Despite these inroads, the modular industry is still in its early stages of adoption in the United States.
“We are in the top of the third inning, as adoption in the U.S. is still early compared to Europe and Asia, which are much further along in modular implementation,” says Mest.
Sklar says there is growing interest in modular from repeat-build developers, extended-stay operations, and student housing groups who value speed, scale, and cost control. Kimberly Byrum, managing principal of multifamily for Zonda, says attainable workforce housing may be another application where the efficiencies of modular construction can deliver affordable product.
Benefits of Modular
The construction labor shortage is not a new issue, and it is likely to worsen as many skilled workers near retirement. At the same time, fewer young people are entering the skilled trades, shrinking the pipeline of labor. These factors make modular construction—an approach that requires fewer skilled workers than traditional methods—an increasingly attractive alternative.
In addition to requiring less labor, the modular process offers significantly faster timelines in controlled environments. Arnold says Z Modular has reduced the typical apartment construction timeline from 14 months to 11 months, with goals of pushing it as low as nine months. Shorter timelines and more efficient labor directly translate to cost savings.
Z Modular’s labor costs to construct a building, for example, is approximately 0.45 hours per square foot; in the traditional stick-built environment, labor costs range from 20 to 40 hours per square foot. Sklar notes efficiencies are especially notable for repetitive units like bathrooms and kitchens.
Operating in a factory-controlled environment also improves safety performance, reduces waste, and lowers insurance costs by as much as 80%. The product is also received well in the market; Byrum notes modular products are not being discounted against traditional market comps.
Given the current market landscape, which includes potential material cost increases due to tariffs and rising housing costs, the certainty of costs for modular construction can be appealing to the sector. Many of the materials used by Z Modular and Modern Living Solutions are sourced domestically, reducing cost uncertainty and supply chain concerns present for most in the tariff environment.
“While material costs may fluctuate, the modular construction process is more efficient, provides a safer environment for workers, and allows for a faster return on investment,” says McMullen.
Courtesy Resia
Kitchens and bathrooms for Resia Golden Glades were built off-site. Construction began in the fourth quarter of 2023, and the first resident move-ins begin in July.
Getting Started and Completed Projects
For companies such as Resia, Greystar, and Zekelman Industries, the decision to enter the modular space stemmed from persistent industry challenges: a tight labor force, scheduling inefficiencies, and inconsistent quality. The upside of modular—precision, scalability, and speed—outweighed capital concerns.
Each company has taken a slightly different approach to modular, with Greystar and Zekelman applying a vertically integrated model that encompasses design, manufacturing, development, and construction. Zekelman has also leveraged its experience in the hollow structural steel manufacturing to produce the Z Block cast steel corner connection system.
The vertically integrated approach allows greater control over the entire process and minimizes variables such as supply chain reliance and miscommunication.
“End-to-end coordination leads to greater speed and efficiency on the construction side, while also delivering consistent, high-quality housing at a more attainable price shortens build timelines, and creates scalable solutions to meet the growing demand for housing.”
Modular Best Practices
Capital Is King
“Ensure you have a committed capital partner and lender before advancing too far into execution.” —Andy Mest, managing director of Modern Living Solutions
Utilize Peer Network
“Connect with other developers who have adopted modular construction to develop products and with manufacturers who are creating these buildings to learn as much as possible about the potential of modular construction.” —John McMullen, marketing director at the Modular Building Institute
Collaborate and Standardize
“If you try to bring overly customized or niche design preferences into a modular environment, you’re going to end up fighting the very efficiencies that make it work. This isn’t traditional construction dressed up in a new format; it’s a fundamentally different process, and it demands a different way of thinking.” —Nate Arnold, president of Z Modular
Flexibility and Transparency
“Focus on reputation, build trust through pilot projects, and demand transparency in costs, logistics, and installation. Standardization improves scalability, but flexibility in interfaces is key for field success.” —Mitch Sklar, director of manufacturing quality at Resia Manufacturing
The Value of Control
“When you control the inputs, you can control the outcome. Close monitoring of tolerances and material handling is nonnegotiable. A slight deviation in a weld or a misaligned framing piece doesn’t just cause a minor issue—it affects the entire stack.” —Arnold
The Ability to Pivot
“Create design flexibility that allows you to build within the parameters of your potential modular partners while retaining the option to shift to traditional construction without requiring major design changes later in the process.” —Mest
Find Your Focus
“In the early days, we took on a wide range of project types: different buildings, different owners, different markets. It quickly became clear that this lack of consistency was creating complexity and slowing us down. We made a strategic shift to focus on three- to five-story apartment complexes. That decision allowed us to standardize our designs, simplify our process, and scale our operations more effectively.” —Arnold
Resia’s HybridFabrication model blends industrialized manufacturing with site flexibility. The company’s bathroom and kitchen pods can integrate into various building types, meaning fewer trades to coordinate, fewer delays, and a more reliable installation process.
To date, Resia has dozens of projects in stages of production across Florida, Georgia, and Texas. Most recently, the company manufactured and delivered over 1,500 prefabricated bathroom and kitchen components in the Resia Golden Glades community in Florida, installing 40 units per week, with full state certification within 27 weeks.
Z Modular has nine active properties totaling 2,000 units with three additional projects in development.
Greystar delivered its first multifamily project in Coraopolis, Pennsylvania: a 312-apartment complex built from 888 individual modules offering a mix of one-, two-, and three-bedroom apartments. The company delivered its second modular project, at Boulden at Southfields in Elkton, Maryland, using over 900 modules for a 330-apartment complex.
“From groundbreaking to having seven modular buildings fully enclosed, the [Boulden at Southfields] project was completed in under eight months,” Mest says. “This outcome reflects the strength of our factory and field teams working together as a fully integrated unit.”
Outlook for the Future
Looking ahead, the multifamily and student housing sectors represent prime opportunities for modular construction, as more stakeholders recognize the efficiencies it can deliver.
“The construction industry is beginning to see that the way things have always been done won’t cut it anymore—not with today’s costs, labor shortages, and market pressures,” says Arnold. “Great companies have already used some level of off-site construction because they understand the full value. What’s happening now is that more of the industry is catching up to that. They’re starting to see modular not as a risk, but as a solution.”
Still, trust in modular construction remains a hurdle—one that can only be overcome through consistent delivery of successful projects. Arnold emphasizes that modular is not a business to enter casually; it requires significant capital, infrastructure, and the right ecosystem—including the right people—as well as focus, and, most important, a reliable project pipeline.
“Developers need to be willing to share cost expectations upfront and engage in open collaboration,” Mest says. “Early alignment with experienced contractors during the preconstruction phase is essential. However, the tendency to prioritize lowest-cost bids over strategic partnerships often works against the integrated approach needed for modular delivery.”
Despite the current barriers, players in the modular sector remain optimistic about the long-term prospects.
As digitization, regulation, and developer expectations evolve, the broader construction industry is moving toward a future that will reward repeatable delivery. Developers and general contractors are beginning to more actively look for solutions that reduce risk and deliver projects faster and the companies that can deliver precise, predictable, and fast results will be rewarded.
“The combination of a constrained workforce, growing population, and cost to develop makes it clear that more efficient and scalable solutions are crucial,” Mest says. “As we look at other parts of the world, countries have been using modular construction for over 50 years and now rely on it for a significant portion of their housing delivery.”
While the path to greater market share will not be linear, every completed module and project helps modular move from an aspirational idea to a practical, proven solution.
“With the right investment and collaboration, modular can fundamentally reshape how housing is delivered in this country,” adds Arnold.
