The Rise of Prefab Construction: Past, Present, And Future

Kia Nejatian
5 min readFeb 12, 2020


While it seems like a new building method, modular (prefab) construction has been with us nearly two hundred years. Since the 1830’s, this method of building structures offsite, and transporting them to their destination was only outdone by the fact that assembly of the sections took half the time it normally would using traditional techniques. Prefabrication has undergone incredible transformation since then and has succeeded today into one of the industry’s preeminent construction approaches.

Let’s take a look at a bit of history of prefabrication, its use today and what’s in store for the future.

1830’s: London, England wood worker John Manning built the first prefabricated home for his son. His son took a job in Australia and John decided to build a house in pieces, as a gift, and ship it to the son down under.

1840’s: As the California gold rush firmly took hold out west, there was now a great demand for new homes to be built. By then, modular building construction had made its way across the ocean to the United States and soon many homes were assembled quickly.

1851: One of Britain’s most famous examples of modular construction was the Crystal Palace, built for Britain’s Great Exhibition. The design was conceived in less than two weeks, using light materials, it was only constructed in a few months. Th palace was dismantled later, moved and rebuilt again at another location.

1900’s: In Chicago, a builder revealed his balloon-frame method to great fanfare. Augustine Taylor devised a way to build walls offsite, the transport them to the predetermined construction site for quick assembly.

Modular Homes and Catalog Adverts: Sears

Roebuck and Co. was the largest department store in the United States. They sold everything from Coca Cola to yes, you guessed it, houses; specifically, prefab modular homes. Between 1908 and 1940, Sears Roebuck sold over 500,000 prefab homes through their popular catalog, directly to their customers. The homes cost two-thirds the cost of a conventionally built home. The construction was so sturdy that there remains quite a few in use to this day.

The Housing Boom of WWII

To meet the growing demand for mass accommodations for the military, Quonset Huts, also known as Nissen Huts were introduced. They were made up of corrugated steel intended for domestic, institutional or military uses.

As the war came to a close, and with so many soldiers returning home, the U.S. experienced a severe housing shortage. To accommodate the expected expanding families, there was a need for a rapid construction solution to build new homes. This time again, prefabricated construction of new homes were chosen due to efficiency, cost reduction, and fast assembly. Once again, many of those units still exist and are in use.

Prefabricated homes were a huge part of post-war construction efforts in Europe and Japan.

Modular Construction and Assembly Today

Modular construction has been a global solution in various countries for decades. The growth potential remains promising, with the countries below showing an estimate of all unattached homes built using modular techniques: Sweden 84%, United States 5%, Germany 9%, Netherlands 20%, and Japan 28%.

Since prefabrication made its way to the United States, major technological innovations have been introduced, including major advancements in software, automation and building information design. Add to this, new processes and materials, make it possible to deliver prefabricated units that are a bit more complex and more pleasing to the eye than ever before.

As demand was extremely high during the 1970’s, innovative commercial applications were created with more to follow during the 2000’s after more advancements in materials were discovered.

Since then, modularization can now be seen in many verticals, including, hotels, apartment buildings, hospitals, offices and schools to name a few: healthcare Facilities 49%, college buildings 42%, buildings in manufacturing 42%.

One key advantage of modular construction over traditional techniques is that it will significantly reduce the odds of exceeding budget and keep a tight rein on veering outside of project scope. This of course aids in avoiding snares or hiccups of any kind normally found in traditional construction (e.g. severe weather for example).

Scheduling issues and unanticipated spikes in labor costs are also minimized using modular building techniques. Since modular units are built in sections in a building facility the workforce remains fairly stable as part of the team will also be used to assemble the units on their designated locations.

Modular Construction’s Positive Impact on Projects

Modular construction has demonstrated over the years, its positive impact on building projects, to include cutting 35% of company schedules by a month. Modular construction reduces construction waste by up to 77% and project cost by approximately 65%.

Traditional projects compared to prefabricated projects can run over budget by up to four-fifths and exceed delivery timelines by up to one-fifth longer to deliver the project. Modular construction today continues its progress in global popularity with more builders and developers seeing the untapped potential still of its utility, productivity and cost effectiveness.

Modular Construction in the Future

A recent report revealed that anticipated growth in the modular construction vertical is projected to increase to $157 billion by 2023. This is due in large part to the urgent need of reliable, rapid and affordable construction solutions in major industries (hospitals, schools, hospitality).

In the U.K. for example, the utilization of modular building practices increased by 6% year-on-year. This is rapid growth that is likely due to the fact that modular construction does not require near the space traditional construction sites will. Especially in the U.K., space to put your materials is always precious. As cities around the world become increasingly populated, there is a trend to see modular construction as the preferred method due to regulatory requirements limiting construction site occupancy onsite for material storage.

Modular construction is seen as more sustainable for future needs. Generating less waste with time saved as materials are assembled in a controlled environment and not subject to periods of rain becoming trapped in walls etc.

Final Thoughts

While building modular may not be for everyone, it remains one of the most cost-effective solutions overall when building out identical units such as apartments, small offices and hotels. Building prefabricated structures brings a higher degree of project certainty to the operation. Something that should be seriously considered especially for areas where space is limited and timelines and budgets are tight.



Kia Nejatian

Real Estate VC @ Second Century Ventures . Former VC @ Plug and Play Ventures, Partnerships @ Kash (acq.), Analyst @ Real Facilities (acq.), Founder StayTO.