How to Prepare for the Growing Prevalence of Modular Construction

Modular construction is not simply tract and pre-fabricated homes, but a growing portion of all sectors of the permanent construction industry, from multi-family to industrial to commercial. According to the Modular Building Institute, as noted in its 2023 “Permanent Modular Construction Report,” permanent modular construction exceeded $12 billion in North America in 2022—approximately 6% of all new construction—nearly tripling its share of 2.14% in 2015. Modular construction, though most commonly associated with housing, is a portion of all sectors of the construction industry.

In this piece, Aaron Brotman looks at one particular open question issue with regard to modular construction and how parties dealing with a modular construction firms should structure their relationships: Are the resulting components a good or a service? As the focus is on construction projects, it does not deal with prefabricated, mobile housing or the distinctions between that and fixed housing units.