Wednesday, March 16, 2016

Commercial Modular Quickly Becoming the Norm for Residential Factories

Before the 2008 housing crash, most residential modular home factories did very little commercial work. Content to selling homes to hungry new home buyers, factories did not have to look to Commercial building to keep the production lines full.

After 2008 many factories were faced with cutting back production, closing their doors or trying something new. The new thing was commercial modular. A lot of factories found that the margins in commercial were a lot slimmer than residential but the idea of putting 100, 200 or more similar floors to the production line had great appeal.

Commercial developers preyed on those slim margins and the need or modular factories to keep the doors open and quickly signed orders that many factory owners later regretted. That is until now.


One important thing that came out of that post housing recession and slim profit margins in commercial modular was a quick education by both the developer and the factory about how to work together. Profits started to rise to normal levels and the developers found that modular was really a great way to save time and money and at the same time getting a good quality structure that was both green and energy efficient. Win-Win.


Modular has become so accepted that Google is even planning to build their new Silicon Valley Campus using modified modules.

It only makes sense that permanent modular construction would be a top consideration for commercial and retail developers which are dependent on producing a constant stream of revenue.

Modular building construction methods can accelerate time to occupancy up to 50% sooner than conventional construction.

Architects, developers and engineers report time savings of 4 weeks or more and budgets are decreased by an average of 6% as well as a 5% decrease in on-site waste.

A successful business is always moving, growing, and changing rapidly. 

Modular commercial and retail buildings are a smart solution to our industry's changing business needs. Commercial modular construction offers a solutions to expand business quickly, and keep everything operating with minimal disruptions and profits flowing.

There are a couple downsides to residential modular factories moving into the commercial modular business:
  • Making sure their builders are not pushed out of the way when a project comes to the line
  • Direct competition with true commercial modular factories.

Many factories have adjusted themselves to these problems and are beginning to find better ways to integrate commercial into their production lines.

Now when you look at a modular home factory, you will see more than just the same old business of the past. Today they are running smoother and many of them have embraced commercial projects as never before.

4 comments:

Anonymous said...

Might add Coach that the commercial now seems to take priority for the faithful residential builder. If builder puts in order they will sometimes tell builder he has to wait 2 months or more before unit can get on line because they are " just so busy". Ever wonder why modular industry is losing builders?

Anonymous said...

I agree with the builder that said that the factories that take on commercial projects get pushed back when projects are being built, but there are two things to consider when you are a builder in today's market.
1. The production lines need to be kept running for a company to succeed today. Commercial jobs do just that for some factories that decide to pursue that market. By keeping their lines running they retain valuable, experienced employees, which we need to build and deliver a consistent product to our customers. And in doing so when we build those single family homes, the buying builders get a better product.
2. Today's home buying group has changed. The young are not as large a segment of the buying audience as they were. the burden of student loans have forced many potential young buyers to rent until such time as they can amass a sizable deposit and buy a home. So these young buyers are renting for longer than normal and are not in the new home buying market.

As an industry I think we have all seen an increase in the number of inquiries by developers looking to build large sale apartment buildings and condos.Changes in zoning laws and codes have made it much easier for developers to maximize the number of units built on any site, which has effectively dropped their costs on a per unit basis.

It's difficult for a factory to sit back and pass on an opportunity to build jobs of this nature when they do not have as much happening in single family.

Finally, this is certainly not a new problem to this industry. For years we all struggled with this business decision and will continue to do so.

Anonymous said...

Dear Anonymous,

While I can certainly appreciate your concern and sentiment, that is only true of manufacturers who have a single plant or production line.

Perhaps you would care to check out Professional Building Systems who opened their second manufacturing facility some time ago to avoid that specific scenario and to show their commitment to their single family builder network. Professional Building Systems runs two separate facilities to assure our builder network timely deliveries regardless of the backlog or building season by strategically scheduling production to accommodate both the Multi-Family and Single Family Business.

Perhaps it is time for you to take a look at Professional Building Systems.

Joshua Margulies said...

anonymous! sometimes i wonder what your mothers were thinking giving you such silly names!

the Hotels, motels, offices, barracks, dormitories, jails, schools, libraries, ETC. that are built with modular technology are work for modular builders! it is nonsense to lament that your two box rancher gets stuck being built behind somebody else's 38 box Motel! I would submit as a modular builder that it is inappropriate to respond this way. I would ask a much more important question: "how do I get in front of the people who want to build hotels motels dormitories etc. I would not blame a factory for taking on new types of business. and if they have no time for me ... there are other factories. capitalism is a blessed thing -- amen.

that is good news about pbs. it was they did that multi floor dormitory thing. Good for you PBS.

churches too! i like modular churches! i want to do one before i die.