Modular construction is a process in which a building is constructed off-site, under controlled conditions. Buildings are produced in “modules” that when put together on-site reflect the design intent and specifications of the architect and developer.

We have seen advancements in modular construction across verticals, and modular construction is showing particular promise for multifamily real estate development.

Modular construction has evolved from single-family homes and low-rise buildings and is now being used to build towers to increase urban density and reduce sprawl. Recent successful modular multifamily projects include a 400-unit midrise apartment building in Kirkland, WA built by Katerra, and two high-rise mixed use tower projects in Oakland planned by RAD Urban.


While modular construction techniques are overcoming a reputation for limited design flexibility, leading designers and builders are continuing to innovate – there’s demand for cross laminated timber and/or steel construction, for example.

One similarity between modular construction and conventional construction techniques is that both require careful planning and attention to detail. A missed detail offsite, at a modular construction scale, can create a major issue for a project team.

While at the NAA Maximize Conference in San Diego in October, I had the chance to discuss the future of modular construction for multifamily real estate development with a cross section of owners, operators, developers, and project managers. Here are some of the key takeaways from those conversations:

Why modular construction makes sense for some multifamily projects:

  • Costs: There are several cost benefits to modular construction – specifically reduced waste, increased material efficiency, reduced construction costs, and less waste due to moisture damage. There are also reduced labor costs because of automation and the controlled factory environment.
  • Efficiency: Modular construction takes advantage of just-in-time construction methods and delivery to the job site. Modular projects currently average about 20% time savings in construction compared to conventional construction. Builders are confident that they can achieve 50% time savings as the processes are refined.

Modular construction and sustainability

At Paladino, we are most interested in understanding the relationship between modular construction and sustainability. There are some obvious environmental wins with modular construction. For example, the factory-controlled process generates less waste and increases material recycling. This benefit is matched by the reduction in job site waste – for example, Oakland-based company RAD Urban is currently using half of the material than a traditionally built building.


In terms of air quality and material selection, the design team and owners can spec all the materials and know exactly where they come from. Teams can spec local materials  and low VOC materials for example, and the controlled environment at the manufacturing facility will allow for greener materials selection and tracking.

Because of the efficiency of install, there is less environmental disruption to the project site, which has benefits for local wildlife and communities.

The leading modular construction firms are considering third-party certification as part of their process. We would like to see certification (LEED and WELL for example) baked into the project at the manufacturing site to validate sustainable and wellness practices. This will also benefit the project developer and owner, given that they will most often have third-party certification requirements built into the project – and it’s certainly proven that multifamily tenants want the confidence of a certified development.

While modular construction has myriad benefits, it’s not without drawbacks. Owners, developers, and designers should ask these questions of any modular construction provider:

  • Are the materials locally sourced?
    • Modules that are shipped a long distance do not qualify for LEED Points, and are not sustainable because of the carbon impact of transporting the materials.
  • What are the changes to the project timeline compared to a conventional construction approach? How long before construction begins must the design and material selection be complete?

Whether you are building conventionally or modularly, you always need to involve your sustainability team early in the process to ensure that the pathway to certification is clear and that all the benefits of green building can be achieved.

Want to learn more about Modular Construction? Explore these resources:

Modular Building and LEED

Prefabrication Modularization in the Construction Industry

RAD Urban


Katerra, Inc.

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