Modular for multifamily and hotels: where the repetition pays

If you had to design a building type for factory production, you would end up with something like a hotel or an apartment building: many rooms of the same size, stacked and repeated, with plumbing in the same place on every floor. That is why these two sectors make up so much of modular construction.

How big a role modular plays

The Modular Building Institute reports that 70 percent of U.S. permanent modular construction is in the multifamily, commercial and education segments, and that in Canada multifamily is the strongest modular segment. MBI's 2026 reports put the U.S. permanent modular market at $20.5 billion in 2025.

The hotel example most people cite

Marriott has been the most public hotel brand on modular. In 2017 it said it expected to sign 50 hotel deals that year incorporating prefabricated guestrooms or bathrooms, more than 10 percent of its expected North American select-brand signings.

In 2019 Marriott announced the AC Hotel New York NoMad, a 168-room, 26-story tower at 842 Sixth Avenue. According to the announcement, guest rooms would arrive fully constructed, inside and out, the roof and rooftop bar would also be modular, and the lobby and restaurant would be built with traditional methods. Marriott said the stacking was planned over a 90-day period. The same release said Marriott had seen the average time to build and open a hotel in North America rise by as much as 50 percent since 2011, which is why it started studying modular in 2014.

That project is a good illustration of a hybrid. Repeating rooms come from the factory, and custom public spaces are built on site, in parallel.

Why it works for these buildings

• Repeat units. A hotel might have one or two room types. An apartment building might have a handful of unit plans. Repetition lets a plant get faster with every module.
• Revenue starts sooner. For both hotels and rentals, opening earlier means income earlier and less interest on the construction loan. McKinsey's research found modular projects accelerate timelines by 20 to 50 percent.
• Wet areas in the factory. Bathrooms and kitchens are the most labor-heavy rooms. Building them in a plant moves the hardest work off site.
• Sound separation. Stacked modules have separate floor and ceiling assemblies, which owners often cite for quieter rooms. Ask your manufacturer for tested assemblies rather than relying on general claims.

Where these projects go wrong

Design not built for modules. A building drawn for site framing and then "converted" usually ends up with odd module sizes, more joints and more site work. Design around the module grid from the start.

Too many unit types. Every unique module slows the plant down. Ask the manufacturer how many module types are reasonable for your project.

Podium and site delays. Many multifamily and hotel projects put modules on a concrete podium or over a ground floor built on site. If the podium is late, the modules wait, and the plant may move to someone else's project.

Late changes. Changing finishes, fixtures or layouts after production starts is expensive. Lock the design before the line starts.

Joints and fire separations. Fire-stopping, corridor connections and roof tie-ins happen on site. Make sure they are fully detailed and assigned in the contract. ICC/MBI 1200 addresses structural connections, utilities and on-site assembly, a useful checklist for scope.

Questions to settle early

• What construction type and height does the code allow for this building, and can the manufacturer build to it?
• How many module types will the design need?
• What is built on site: podium, lobby, amenity spaces, corridors?
• Who is responsible for the joints between modules, the corridor and the roof?
• What is the plan if the podium is late?
• For brands, which brand standards does the manufacturer already know?

Bottom line

Hotels and apartment buildings are where modular has the longest track record, because the buildings are made of repeated rooms. The projects that go well start with a modular-friendly design, keep unit types few, and treat the site work and joints as carefully as the boxes.

Financing and insurance

Lenders and insurers have become more familiar with modular, but they still ask different questions. Expect your lender to want to know how deposits to the manufacturer are protected, when title to modules passes to you, and what happens if modules are finished before the site is ready. Builder's risk insurance needs to cover modules in the plant, in transit and on site, and the handoffs between policies should be clear. Bring your lender and insurance broker into the conversation before you sign with a manufacturer, not after.

One more practical point: visit a finished modular building of the same type before you commit. Walk the corridors, look at the joints, and ask the property manager how it has held up. Ten minutes in a real building teaches more than a brochure.