Lower Building Costs per Square Foot with Modular Construction

When planning the construction of a commercial building, it’s not uncommon to see dollar signs left and right, in staggering quantities, too. Location, materials, and labor are just a few components that affect a commercial building’s bottom line.

According to a 2021 market analysis from Cummings, the average commercial building cost varies considerably. Here are a few examples of the U.S. costs per square foot we've seen across the United States:

The cost per square foot varies not only by building type, but also by location. San Francisco, for example, had a staggering average cost per square foot of $439.29. Towns in the Midwest and South tend to be less expensive. An office building in Dallas might cost $160 per square foot, comparatively. 

With the advent and adoption of modular construction, more and more decision makers are considering this growing method as a solution to some of the pitfalls of traditional construction - especially cost. Whether a commercial construction project is most impacted by its building classification or location, modular construction has the potential to bring the cost per square foot of a commercial building down to more palatable numbers. 

Let’s take a closer look at how modular construction lends itself to being so cost-effective. 

How Modular Construction Lowers Commercial Building Costs

Shortened Timeline

Traditional construction projects are vulnerable to weather delays and logistical challenges. These can lead to cost overruns that add up quickly, thanks to the old “time is money” adage. 

Modular construction can be completed up to 50% faster than traditional construction since construction takes place offsite, in factory-like controlled environments. This allows for better quality control, more streamlined processes, and weather protection. While construction takes place in a factory setting, site prep can be completed at the same time, propelling the project toward an on-time finish more easily. 

Bonus: When there’s an urgent need to be met, modular construction shines. We’ve seen this play out when companies need to address employee well-being ASAP because of low retention from sub-par work facilities. A few months of offsite construction beats waiting over a year for a brand new locker room, as our friends at Clarios can tell you. 

Controlled Costs

Modular construction controls costs more efficiently than traditional construction in a variety of ways, particularly through efficient labor. Off-site construction in a controlled factory environment has more efficient workflows, fewer workers required onsite, and a lower need for more specialized skill sets. The repetitive nature of factory work is cost-effective, and it lends itself to consistent quality, avoiding timely and expensive rework. 

Manufacturers can keep their prices more stable because of the predictable factory setting. They have trusted, regular suppliers and are less likely to suffer from supply chain shortages. And since construction happens indoors and isn’t subject to weather delays, projects are less likely to exceed budget for idle labor or extended equipment rentals, which is a common source of cost overrun for traditional construction. 

Bonus: Traditional construction has three times the number of workplace fatalities as manufacturing: 1008 vs 340 in 2020. Modular construction is an undoubtedly safer model for employee well-being compared to its traditional counterpart. 

Minimized Waste

The EPA considers construction waste to be one of the largest contributors to landfills annually. New construction accounts for a staggering 57 million tons of it. Waste rates in traditional construction are higher because onsite construction does not lend itself to lean building practices. Managers are likely to over-order materials to avoid delays, leading to excess that’s not always used. And on-site cutting generates scraps that are more easily discarded than reused.

Modular construction can decrease the overall weight of waste by 83.2% compared to traditional construction for a variety of reasons:   

• Controlled factory environment - easier to track material usage, optimize cutting, and reuse leftover materials
• Standardized processes - ensures consistent material usage and enforces uniformity in production
• Bulk ordering & efficient handling - materials ordered in bulk have reduced packaging waste and transportation costs, and secure manufacturing environments are less prone to theft or vandalism

Bonus: Environmental sustainability in construction is a growing concern. 93% of CEOs say sustainability issues are important for the future success of their business. The significant waste reduction and overall lower carbon footprint of modular construction is too valuable not to consider as environmental concerns become more pressing. 

Is Modular Construction the Solution for Commercial Building Cost Savings?

While modular construction may not suit every commercial construction project’s needs, it can be a highly efficient and cost-effective solution for commercial building projects. For the projects that need to be built faster, smarter, and more affordably, modular construction has the potential to exceed expectations. 

Wondering if your commercial building can be accomplished with modular construction? Reach out to our team at 512-231-1010 or email us at Sales@FalconStructures.com.

If you want to learn more about offsite construction with shipping containers, try our mini-master class of shipping container basics with CEO Stephen Shang.