Greystar Takes a Leap Into Modular Homes

 

"Modular housing development has long been a fringe part of the U.S. market, primarily limited to lower-budget or emergency housing.

The country's largest apartment operator is trying to change that.

Greystar Real Estate Partners on Monday is opening a six-building modular apartment complex, complete with a gym, amphitheater and bocce courts. It is Greystar's first U.S. project assembled using this alternative construction method, meant to combat the chronic delays of traditional developments.

The new complex, called "Ltd. Findlay," is in Coraopolis, Pa., about 16 miles west of Pittsburgh. It is offering leases for 312 apartments, making it one of the largest multifamily modular projects in the U.S.

Ltd. Findlay is the first property developed at Greystar's modular factory in Knox, Pa. The developer has six more modular projects in its U.S. pipeline that will also be built at the Knox site.

Instead of being built on-site like conventional homes, modular homes are assembled in a factory, transported to the final building site and then stacked atop each other like jumbo Lego blocks. Proponents say this type of building can be completed faster using fewer workers and with materials that can be purchased at a bulk discount, which can reduce overall costs.

Even so, modular remains only a small portion of the overall construction market, reflecting a number of challenges, from the cost of transporting pieces to difficulties with financing and regulatory approval.

But its use is steadily growing. With the construction workforce shrinking and costs rising, the efficiency gains of modular are gaining traction with mainstream developers.

From 2015 to 2023, the annual market share of modular construction more than tripled to 6.6%, according to the Modular Building Institute, one of the industry's trade groups.

Developers such as Related and Amherst are among the major companies that have experimented with modular in the U.S. Marriott also has begun using modular to build some of its new hotels.

McKinsey projects that modular construction revenues globally could grow to as much as $1.1 trillion by 2040 from $180 billion in 2022.

With the cost of materials and labor rising, "modular emerges as a more viable alternative to traditional construction methods," said Jose Luis Blanco, a senior partner at McKinsey who leads the global engineering, construction and building-materials practice.

President-elect Donald Trump has proposed expanded tariffs and immigrant deportation, which could heat up material costs and further squeeze the construction workforce. Though modular construction wouldn't be immune from those shocks, industry analysts say it may be more insulated than traditional builders.

Greystar, based in Charleston, S.C., manages more than 954,000 units in North America. The company first found success with modular building in the U.K., said Andy Mest, the managing director of the company's modular business. He had worked on Greystar's London projects and wanted to replicate their outcomes domestically.

In 2020, the multifamily-building operator bought its Pennsylvania manufacturing facility and jump-started its U.S. modular operation, Modern Living Solutions.

Ltd. Findlay was built roughly 40% faster than Greystar's traditional projects, Mest said." [1]

1. Greystar Takes a Leap Into Modular Homes. Picciotto, Rebecca.  Wall Street Journal, Eastern edition; New York, N.Y.. 03 Dec 2024: B.1.