Why Modular? For those who are new to modular, this type of building consists of a number of code-compliant structures that are shipped to the construction site on a truck and laid on a permanent foundation using a crane. These modules, or boxes as they’re known in the industry, arrive onsite with finished interiors, including carpeting, walls, windows, doors, stairs, plumbing, and wiring. What the boxes represent varies from project to project. One box could be a single room, or even two small rooms; two or three boxes could be placed together with an opening between them to create a larger space; and so on. It all depends on the design.
Regardless of the layout, though, modular is usually cheaper than traditional construction. Still, how much money a multifamily builder can save on a low-rise apartment project by using modular rather than traditional construction depends on the job.
“If a project is laid out with modular in mind, the savings can be 15 percent to 25 percent, figuring that construction can be done in one-half to one-third the time,” says Dave Boniello, vice president of sales and marketing for Simplex Industries, a modular manufacturer in Scranton, Pa.
Those figures will vary by region. In the Northeast, where labor is very expensive, savings will tend toward the higher number. On the other hand, the savings will be lower in the Southeast, because there’s a larger pool of lower-cost labor.
But even where modular construction costs nearly equal those of site-built, the biggest savings for multifamily owners comes from the shortened construction schedule. For instance, Simplex shipped a 438-unit apartment complex to East Meadow, N.Y., for Long Island developer Jan Burman. The project took 14 months from start to finish, but Burman says it would have taken three to four years to build the property the traditional way. By going modular, he saved two years’ worth of construction financing and rented the apartments two years earlier.
There’s another financial advantage to modular. Because modular manufacturers can buy building materials in bulk, they can hold their prices a lot longer than a conventional building supplier. That’s a tremendous advantage at a time when cement, plywood, and other materials are spiking in price. “We work with our suppliers to secure our materials costs,” says David Reed, vice president of Penn Lyon Homes Corp. in Selinsgrove, Pa. “The end of last year and the first quarter of 2004 saw a significant increase in sheathing costs. Rather than going back to our buyers for an increase, we gave up profit margin.”