Modular construction is not simply tract and pre-fabricated homes, but a growing portion of all sectors of the permanent construction industry, from multi-family to industrial to commercial. According to the Modular Building Institute, as noted in its 2023 “Permanent Modular Construction Report,” permanent modular construction exceeded $12 billion in North America in 2022—approximately 6% of all new construction—nearly tripling its share of 2.14% in 2015. Modular construction, though most commonly associated with housing, is a portion of all sectors of the construction industry; Verified Market Research’s 2022 market overview study anticipates that modular construction will generate over $136 billion globally annually by the end of the decade across all sectors, and major participants in the modular construction field include some of the largest international construction firms, such as Skanska and Lendlease. New Jersey will not be immune or passed by as modular construction takes over more and more of the construction industry.

This piece looks at one particular open question issue with regard to modular construction and how parties dealing with a modular construction firms should structure their relationships: Are the resulting components a good or a service? As the focus is on construction projects, it does not deal with prefabricated, mobile housing or the distinctions between that and fixed housing units.