GUEST SUBMISSION: Developers, policymakers and consultants are increasingly pointing to offsite construction as a way to accelerate housing delivery, improve quality and reduce costs.

Initiatives such as Build Canada Homes reflect the growing policy focus on scaling-up housing delivery across the country, with modular and other forms of offsite construction often cited as potential tools to help increase supply. While modular construction is often framed as an innovation – even a disruption – the truth is more nuanced.

Modular construction is not new.

In fact, modular construction in Canada, particularly wood-frame construction up to six storeys, has been part of the industry's toolkit for decades. What is new is the current desire to leap directly into modular at scale in an effort to address our housing crisis.

Modular housing in the U.K.

In the United Kingdom, where Modern Methods of Construction (MMC) have been actively promoted for over a decade, modular construction has moved beyond theory into implementation. Projects, such as Union Wharf, the U.K. Ministry of Defence’s Single Living Accommodation initiative, and Blackhorse Mills demonstrate that factory-built housing can deliver high-quality residential buildings – from low-rise to multi-storey – at speed.

Ten Degrees Towers, the world's tallest modular residential buildings at 44 and 38 storeys, stands out as one of the greatest examples, having been delivered in just 26 months.

One of the most persistent misconceptions in the North American market is the assumption modular construction can be treated as a downstream procurement decision, something to be "plugged in" after planning approvals are secured and architectural intent is largely resolved.

In practice, modular construction requires designing for manufacturing from the outset. In the U.K., this has often involved specialized consultants embedded in the design team from Day One. Growing pains are inevitable in any industrial transition, but they are far better encountered in drawings and coordination models than on an active job site.

Ultimately, the goal of modular delivery is not simply to move work offsite, but to change what happens onsite. Foundations, cores and podiums can be prepared while housing units or building components are manufactured concurrently. The job site becomes an assembly platform, as close to a production line as possible.

Many "shades" of modular housing

While volumetric modular construction –– visually identified by craned, stacked "boxes" – often captures the public imagination, the U.K. has formally recognized multiple "shades" of modular construction through government-backed MMC classifications.

These range from full volumetric systems to panelized structures, non-structural sub-assemblies and prefabricated wet-area pods.

This matters for Canada.

In the near term, what is most realistic is a middle ground:

1. Increasing the adoption of panelization, meaning the off-site fabrication of building elements, such as wall, floor, or roof panels that are then transported to the site and assembled into a complete structure.
2. Increasing the use of non-structural preassembled systems, meaning components such as bathrooms, or façade elements, are manufactured off-site and integrated into otherwise conventional, structural frames. 

These hybrid approaches allow the industry to progressively adapt to a product-led mentality without the immediate capital exposure associated with full volumetric delivery.

Trades have generally adapted well to this transition in the U.K.

However, recent developments south of the Canadian border suggest this evolution is not always frictionless, reinforcing the importance of early engagement across the supply chain. It is also worth noting labour shortages were a key driver of the adoption of modular construction in the U.K., which is not necessarily the case today in Toronto.

The financial implications for builders

Equally important are the financial implications. Modular construction shifts a significant portion of construction value into the manufacturing phase, requiring earlier capital deployment and introducing lender unfamiliarity with factory risk. In the U.K., insurers and funders have had to adapt their underwriting frameworks accordingly.

Perhaps the most overlooked lesson is that modular construction typically becomes cost-effective at scale. Manufacturing relies on large, secure production pipelines to justify investment in facilities and automation.

Drawing on lessons from the automotive industry, the best strategy to build a pipeline is to drive design standardization across building components, including the building frame, allowing a range of different product outcomes. Without this mindset shift, the efficiencies associated with offsite construction are difficult to achieve.

As Toronto continues to explore modular construction as part of its housing strategy, the question is no longer whether the technology works. It does.

The real question is whether the market, from designers and developers to lenders and regulators, is ready to invest in the preparation required to truly reap its benefits.