Greystar opened its first modular apartment complex in Pennsylvania this week. Experts say the multibillion-dollar company’s move into modular construction signals a major change to U.S. practices.
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Greystar Real Estate Partners has entered the U.S. modular housing industry by opening its first modular apartment complex in Pennsylvania, the Wall Street Journal reported Monday.
The complex has 312 units in six buildings and was constructed within Greystar’s modular factory in Knox, Pennsylvania. Each building was completely constructed in a factory and transported to its permanent location in Coraopolis, a borough located 26 miles west of Pittsburgh.
Breaking away from the typical mold of a modular complex, Greystar’s development offers luxury amenities such as an amphitheater, bocce court, and state-of-the-art gym.
Andy Mesut |Credit: LinkedIn
“Findlay Ltd. is an important milestone for Greystar and Modern Living Solutions,” Andy Mest, Greystar’s managing director of development, said in April. “This is our first Ltd. community built entirely with modular construction. This allows us to deliver an achievable product that reduces construction waste and is more sustainable.”
Mesto said modular construction is more efficient than traditional methods. Ltd. Findlay was built 40% faster than other Greystar properties and required only one-third the normal labor force. He also said modular construction is more environmentally friendly, with the Ltd. Findlay project generating 90 percent less waste than traditional on-site development.
All this translates into a 10% reduction in construction costs. This is a competitive advantage in an industry expected to face increasing headwinds from President-elect Donald Trump’s immigration and tariff policies.
“We’re focused on the most attractive or largest segment of the market, which is seven stories and under,” Mesut told the Journal. “Other people can make you taller and sexier.”
Greystar plans to build six additional modular complexes. However, all projects will be limited to the Northeast and Midwest due to the logistical challenges associated with shipping modular units over long distances. Currently, the company can only build modular complexes within 600 miles of its Knox plant.
Tom Hardiman, executive director of the Modular Building Association, said Greystar’s logistics problems highlight the pitfalls of a housing market that still relies on traditional building methods. “The biggest barrier is maintaining the status quo,” he told the Journal. “Everything about construction is written for a world built on site.”
Beyond transportation, Hardiman and Mesut said the financial sector also needs to keep up with the complexities of modular construction. Lenders are now wary of funding these types of projects, as they require more upfront capital. There is also the added concern that projects will be delayed or canceled due to unique regulatory standards that make it difficult to obtain the proper permits for modular buildings.
Mest said Greystar regularly provides lenders with tours of the Knox facility to better understand modular construction practices. The company also had to obtain certification for the facility’s modular construction, Mesut said.
Despite the hurdles to modular construction, McKinsey senior partner José Luis Blanco said it is likely the future of housing in the United States.
“We’ve been thinking about modular as an option, and I think we’re beyond that,” he told the Journal. “It’s purely a necessity.”
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