Modular housing remains a small slice of U.S. residential construction, but a subset of builders is pushing the model forward \u2013 particularly in multifamily, where speed, labor constraints and high urban costs can make off-site construction pencil.<\/p>\n
Philadelphia-based Volumetric Building Companies<\/strong> (VBC), which builds apartments, student housing and hotels, is among the firms targeting that opportunity. During a session earlier this month at The SHIFT \u2013 a placemaking conference in Orlando, Florida, hosted by Tavistock Development Co.<\/strong> \u2013 VBC CEO Vaughan Buckley laid out where modular works, where it doesn\u2019t, and why VBC has stayed focused on dense urban projects.<\/p>\n Buckley also acknowledged the sector\u2019s uneven track record in the U.S. Modular has been framed for years as a growth niche, but it has also produced notable failures \u2014 including Katerra<\/strong>, which spent more than $2 billion over six years before filing for bankruptcy in 2021<\/a>.<\/p>\n VBC argues it has a repeatable model for specific high-cost, land-constrained markets, particularly in the Northeast and on the West Coast. Since 2009, the company has opened a 328,000-square-foot factory in Berwick, Pennsylvania; acquired a former Katerra factory in Tracy, California, totaling 577,000 square feet; and expanded in Europe<\/a> with a factory in Poland of more than 100,000 square feet. VBC said it has delivered roughly 7,000 units to date.<\/p>\n Buckley founded VBC around high-density urban projects \u2013 typically 100 units or more \u2013 a niche he said many modular competitors avoided. When VBC launched in 2009, only about 0.25% of Philadelphia\u2019s construction used off-site components, Buckley said.<\/p>\n \u201cVBC approached modular a little differently than our contemporary peers at the time, and it was because we had an urban focus,\u201d Buckley said.<\/p>\n VBC targets large projects because the model\u2019s time savings and labor advantages are more meaningful in markets where construction is expensive and job sites are logistically difficult. In dense cities, Buckley said, sequencing and risk management can be more complex \u2014 conditions where he believes factory-built components can reduce friction.<\/p>\n \u201cWhere can you make the biggest impact? You make it in areas where labor is constrained and where the neighborhoods are tough to do business with, because of the logistical complexity of just being there,\u201d Buckley said. \u201cIt\u2019s a lot harder \u2026 in those environments. It\u2019s a lot more complex from a construction sequencing perspective, and the risk level is substantially higher, so that\u2019s really what has differentiated us.\u201d<\/p>\n VBC builds with both steel and wood, but uses a steel modular structural system for high-rise construction above five stories. The citizenM hotel in Manhattan\u2019s Bowery neighborhood, built by VBC, was the world\u2019s tallest modular hotel when it opened in 2018 at more than 245 feet.<\/p>\n In 2022, the company merged with Poland-based Polcom<\/a>, a manufacturer of steel-framed modular buildings. Buckley said the merger expanded the company\u2019s ability to deliver buildings up to 35 stories, reinforcing its urban infill strategy.<\/p>\n \u201cThese kinds of complex sites really can only be done with a noncombustible product like steel, and now we\u2019re bringing that to the U.S.,\u201d Buckley said.<\/p>\n Multifamily modular construction can shorten timelines by 30% to 60% compared with traditional construction, Buckley said. This is largely because site work and module production can occur concurrently. The factory model can also reduce labor needs and improve repeatability.<\/p>\n Cost savings, however, are market-dependent. In lower-cost regions \u2013 especially where land is plentiful and labor is cheaper \u2013 modular\u2019s advantages may be limited.<\/p>\n As a result, Buckley said VBC\u2019s approach is most competitive in expensive, land-constrained markets such as coastal California or the I-95 corridor from Washington, D.C., to Boston. By contrast, he described Central Florida as a tougher fit for steel high-rise modular at current construction costs. VBC\u2019s U.S. projects are concentrated in Los Angeles, Washington, D.C., Philadelphia and New York, he said.<\/p>\n \u201cOrlando is a very difficult market for modular to work on a steel high-rise scale, because the cost of construction here hasn\u2019t yet met a pivot point where the efficiency in the factory can provide you with high cost savings,\u201d Buckley said. \u201cBut it can still provide you with schedule savings, and it can still give you a performance impact that\u2019s positive.\u201d<\/p>\nVBC\u2019s urban focus<\/h2>\n
Where VBC\u2019s model works well \u2013 and doesn\u2019t<\/h2>\n
Modular\u2019s growth trajectory<\/h2>\n