Modular Construction: New Commercial Property Applications

(Photo credit: psd)

If there’s one common thread to the huge number of different technological changes roiling commercial real estate, it’s standardization.  Standardization looks for ways to treat different things in the same way, and build efficiencies as a result.  Standardization is behind all the software tools we use and increasingly depend upon – the web, your desktop, your phone, all need to run the application you need.  The listings data you depend upon has to meet certain standardized criteria or it won’t publish.  In finance, standardization of debt instruments gives us CMBS and other tools to increase credit and liquidity (sometimes too much!)

Standardization is also the enabler behind prefab (aka modular) construction.  Long a fixture in single-family residential, the practice of assembling major building components off-site has not been as historically popular in commercial construction projects, accounting for only 1% of US building market, generally limited to schools, hospitals, dormitories and some retail stores.  But that is changing as technology continues its inexorable march and commercial property developers look to squeeze every dime until it hollers.

The trade group Modular Building Institute says the market in modular construction for commercial buldings is set to increase over the next five years.  I took a look at hotels and data centers and found trends that support this idea.


This neat animated video walk-through of a single hotel project utilizing modular construction techniques, details various measures of efficiency for construction schedules as the project gets built (mostly under a factory roof, down to the floor tile and wall treatments.)

Data Centers

Customization – the mortal enemy of standardization – is costly in the building of data centers.  It is falling by the wayside in the provisioning of multi-tenant data centers (MTDC) that rely on standardization of space along with its critical cooling, access and power requirements.  These packaging techniques for space afford tenants the ability to scale their square footage as their growth demands  — as opposed to the maximum that the landlord would traditionally prefer to rent.

The prefabricated, modular data center promises to have a major impact on the economics and technology of this still-nascent commercial property industry.  For all the same reasons that prefab is attractive elsewhere — efficiency, cost control, and the avbility to leverage real-world business metrics in space provisioning.

An excellent white paper detailing the impacts of prefab construction and provisioning is “Data Center 2.0: The Industrial Evolution”, provided by data center vendor IO.  Download the full paper here.

One Comments

  • Brent Ellis

    October 16, 2013

    Using Modular Construction for hotels in high density urban areas just makes sense, especially when considering things such as land costs/lot sizes.


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