Modular and panelized construction – often positioned as a tool to expand the supply of affordable housing – is also gaining traction in the luxury, custom homebuilding market.
At The SHIFT, a placemaking conference hosted by Tavistock Development Company earlier this month in Orlando, Florida, Plant Prefab Founder and CEO Steve Glenn said off-site methods can help builders deliver bespoke homes faster and with fewer on-site coordination issues, especially in high-cost, labor-constrained markets.
Plant Prefab produces townhomes, student housing, apartments and hospitality projects, but Glenn said custom single-family homes in high-demand urban and suburban neighborhoods and resort communities make up a sizable share of the company’s work.
Why modular and panelized work well for custom homebuilding
Plant Prefab, based in California, uses both modular and panelized construction. Glenn said combining the two is a fit for custom projects because many of the places where luxury homes are built have high labor costs and limited skilled trades.
“There’s this incredible market discontinuity,” Glenn said. “The places where custom projects are happening — urban infill, mountain home communities and second-home communities — all share the same characteristics of high land and labor costs and scarce labor.”
Plant Prefab operates a 270,000-square-foot factory at Tejon Ranch, California, that the company says can produce more than 3 million square feet annually. Each project begins with a detailed digital manufacturing model integrating architectural, structural and mechanical systems.
That up-front coordination is designed to reduce on-site conflicts and material waste. Plant Prefab’s latest corporate sustainability report says the process reduces waste per square foot of production by about 40%.
Plant Prefab also points to energy-efficient systems and fire-resistant materials in its designs — positioning the company as a potential partner for rebuilding in fire-impacted parts of California.
At the factory, automated equipment cuts, labels and assembles components that are then shipped to job sites. Glenn said the ability to mix modular and panelized elements helps the company keep projects customized while improving predictability.
Glenn said modular construction allows site work and fabrication to run in parallel, with potential schedule savings of 25% to 50%. But he added that modules can force design compromises on some builds, while panelized components can offer more flexibility.
Plant Prefab works with developers and architects to adjust plans so they are easier to manufacture and assemble off-site, without sacrificing the design intent, Glenn said.
“There will always be a place for architects in custom architecture, particularly in cities, and we want to make that more efficient,” Glenn said. “So we work with architects to think about how to do their design in a way that reflects their intent, but a little bit more efficiently.”
Glenn also said prefab can reduce surprises in the field and lower the frequency of change orders. Plant Prefab issued three change orders last year that were not client-driven, he said.
A competitive niche
Even with benefits like speed and predictability, off-site methods remain a small slice of the U.S. single-family market. The National Association of Home Builders estimates that modular and panelized construction accounted for 3% of single-family home construction in 2023 and 2024.
Glenn said the biggest barrier has been economics.
“Historically, our cost for land, labor and materials has been much less than in Japan, Scandinavia, Germany and other European countries,” he said.
He also pointed to a wave of venture-backed attempts that struggled to scale. Katerra, which spent more than $2 billion over six years, filed for bankruptcy in 2021.
Still, Glenn said the market is large enough for companies that pick the right lane and execute.
“A bunch of money came in for some start-ups,” Glenn said. “As in any new market. A bunch of people come in. A bunch aren’t going to make it, but some are going to do disproportionately well.”