Greystar opened its first modular apartment complex in Pennsylvania this week. Experts say the multi-billion dollar company’s foray into modular building signals a significant shift into the practice in the U.S.
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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, according to a report from The Wall Street Journal on Monday.
The complex, which includes 312 units across six buildings, was built in Greystar’s modular factory in Knox, Pennsylvania. Each building was fully constructed in the factory and transported to its permanent location in Coraopolis, a borough located 16 miles west of Pittsburgh.
Breaking from the typical mold for modular complexes, Greystar’s development offers luxury amenities including an amphitheater, bocce courts and a state-of-the-art gym.
Andy Mest | Credit: LinkedIn
“Ltd. Findlay is a significant milestone for Greystar and Modern Living Solutions,” Greystar Managing Director of Development Andy Mest said in April. “This is our first Ltd. community that is built entirely from modular construction … This allows us to deliver an attainable product that is also more sustainable due to reduced construction waste.”
Mest said modular construction is more efficient than traditional methods. Ltd. Findlay was built 40 percent faster than other Greystar properties and required only a third of the typical workforce. He also said modular construction is more environmentally friendly, with the Ltd. Findlay project generating 90 percent less waste than traditional, on-site developments.
All of that works out to a 10 percent savings on construction costs — a competitive advantage in an industry that’s expecting strengthening headwinds from President-Elect Donald Trump’s immigration and tariff policies.
“We’re focused on the juiciest or the biggest segment of the market — seven stories and below,” Mest told WSJ. “Other people can build the taller, sexier things.”
Greystar is planning to build six more modular complexes; however, all of the projects will be confined to the Northeast and Upper Midwest due to the logistical issues that come with transporting modular units long distances. Currently, the company can only build modular complexes within 600 miles of its Knox factory.
Modular Building Institute Executive Director Tom Hardiman said Greystar’s logistics problem highlights the pitfalls of a housing market that’s still dependent on traditional building methods. “The biggest barrier is the status quo,” he told The WSJ. “Everything about construction was written for a site-built world.”
Beyond transportation, Hardiman and Mest said the financing sector has to catch up with the intricacies of modular building. Currently, lenders are wary of funding these kinds of projects as they require more upfront capital. There are additional worries about a project being slowed or shuttered due to unique regulatory standards that make it difficult to acquire proper permits for modular buildings.
Mest said Greystar regularly gives lenders tours of its Knox facility so they have a better understanding of modular construction practices. The company also had to get the facility certified for modular construction, Mest said.
Despite the hurdles that come with modular construction, McKinsey senior partner Jose Luis Blanco said it’s likely the future of U.S. housing.
“We’ve seen modular as a choice. I think we’re past beyond that,” he told The WSJ. “It’s just a pure necessity.”
