Modular construction ramps up as integrated firms earn higher margins

Global, August 22, 2025

News Summary

A broad study of the modular construction sector covering 700+ companies across 50+ countries finds rapid expansion and clear profit patterns. Companies that combine factory manufacturing with on‑site assembly report substantially higher EBITDA than manufacturers-only players. Modular methods reduce on‑site labor, shorten schedules, and cut waste when systems and logistics are optimized. Cities are testing zero‑emission sites using electric machinery and battery power, while architects deliver near net‑zero buildings that pair off‑site construction with low‑carbon site operations. Success is tied to repeatable building systems, value‑chain control, digital integration and careful, demand‑led scaling.

Modular construction surges: 700+ firms show gains, integrated players post the best margins

A new industry analysis of more than 700 modular firms across 50+ countries shows modular building methods are growing fast and delivering clear business and environmental advantages — especially for firms that control more of the building process. The research finds that companies that both manufacture and assemble modules tend to post much higher profit margins than those that only make parts, while off‑site building methods can cut labor needs and project timelines sharply.

Key findings up front

• Database covers over 700 companies; more than 100 have operated 50+ years and more than 200 were founded in the past 20 years.
• Market is highly fragmented: roughly 60–70% of firms earn less than €50 million in revenue; only 5–10% have revenues above €500 million.
• Firms that combine modular manufacturing and on‑site assembly report average EBITDA margins of around 15–20%, versus ~5% for manufacturing‑only firms. Firms focused on permanent buildings show a weighted average EBITDA near 7%.
• Modular methods can reduce jobsite labor by up to 40% and speed schedules by up to 50% when applied at scale.

Why integration matters

Companies that manage more steps of the value chain — from design and manufacturing to on‑site assembly — capture more value. Advantages include broader project scope, specialized teams, fewer subcontractor pass‑through costs, tighter logistics and faster learning cycles. Successful firms tend to center on a repeatable building system focused on one structural material and to scale in a careful, focused way.

Where profits are strongest

Profitability varies by product, building type and complexity. Firms producing 3D volumetric modules see slightly higher margins than those making 2D panels. The hospitality sector posts the highest average profitability near 19% EBITDA, while single‑family and multiunit residential segments average about 8% EBITDA. Lower‑complexity, repeatable projects often yield higher margins because factory work and standardization are maximized.

Materials, markets and models

Globally, company focus breaks down roughly to 42% steel, 38% timber and 11% concrete. Most firms use a project‑based sales model; however, rental and mixed sales+rental models improve factory utilization and often deliver higher returns. Today the market remains mostly local — more than 60% of firms operate primarily in a single market — but digital tools and new logistics are making cross‑border work more feasible.

Environmental and site innovations

Modular and off‑site fabrication reduce waste and improve safety by moving much of the work into controlled factory settings. These methods pair naturally with circular strategies like reuse, controlled dismantling and upcycling, and with digital material passports that track components for future reuse.

Zero‑emission construction pilots and net‑zero buildings

Practical examples include a city pilot that ran an urban construction site with only electric heavy machines, saving about 35,000 litres of diesel and roughly 92.5 tonnes of CO2 compared with diesel operations. The pilot achieved roughly 99% emissions savings except for a propane burner that lacked a clean alternative. Battery container systems designed to replace diesel generators are in active use in several places, cutting both emissions and noise by large margins and offering remote monitoring and smart power delivery.

On the building side, a recently completed mixed‑use project in a transformed industrial neighborhood demonstrates net‑zero strategies for heating, cooling and ventilation. The building pairs geothermal wells, rooftop solar, thermal mass and natural ventilation to lower energy need and shrink embodied CO2 from materials and transport by over 50% compared with standard practice. Design choices such as façade valves and exposed concrete cores reduce the need for ductwork and mechanical systems and keep future remodeling simpler.

What firms and cities should watch

The study highlights three shared traits among successful modular players: a clear building system, meaningful control of the value chain, and disciplined, focused scaling. Mistakes to avoid include building large automated factories before stable demand is proven and expanding into new geographies too soon. For cities and developers, public procurement targets for zero‑emission sites and tighter sustainability rules are accelerating demand for cleaner equipment and modular approaches.

Bottom line

Modular construction is no longer niche. It offers clear benefits in speed, labor savings and lower waste, and the best margins go to companies that integrate manufacturing and assembly and stick to a focused, repeatable system. Yet the market remains fragmented and still captures only a small share of overall construction — leaving room for multiple successful players but also risks for investors and firms that scale prematurely.

FAQ

Quick reference: key features

Feature	What it means	Data point
Industry scope	Companies tracked across multiple countries focusing on modular products	700+ firms in 50+ countries
Profitability by model	Integrated manufacturing + assembly vs manufacturing-only	~15–20% EBITDA vs ~5% EBITDA
Labor & time benefits	Reduction in on‑site crews and faster delivery	Up to 40% less labor, up to 50% faster
Material focus	Main structural materials used by firms	Steel 42%, Timber 38%, Concrete 11%
Environmental pilots	On‑site electrification and battery power replacing diesel	35,000 litres diesel saved, ~92.5 tonnes CO2 saved on a pilot site

Deeper Dive: News & Info About This Topic

Additional Resources

• McKinsey: Putting the pieces together — Unlocking success in modular construction
• Wikipedia: Modular construction
• BBC Future: The Scandinavian way to zero‑carbon construction
• Encyclopedia Britannica: Zero‑carbon construction (search)
• Designboom: Snøhetta Vertikal Nydalen, Oslo (Apr 27, 2024)
• Google Search: Snohetta Vertikal Nydalen Oslo
• Electrive: Oslo’s first zero‑emissions construction site in action
• Google News: zero‑emission construction site Oslo
• Noticias Ambientales: Circular construction — From use‑and‑throw‑away to reuse and transform buildings
• Google Scholar: circular construction reuse transform buildings