Prefab vs. Traditional Construction: What’s Better for CRE Projects?
5 min read
In the fast-paced world of commercial real estate, timing, cost, and quality are critical factors in determining the success of any development. As innovation reshapes the construction industry, prefabricated (prefab) construction is emerging as a compelling alternative to traditional building methods. But is this the right fit for every CRE project?
In this article, you’ll explore the key differences between prefab and traditional construction, the pros and cons of each, and how to determine which method is best suited to your next commercial development.
What is Prefabricated Construction?
Prefab construction involves manufacturing building components, such as walls, floors, or entire modules, off-site in a controlled factory environment. These parts are then transported to the site for rapid assembly. There are several types of prefab methods, including modular construction (fully built units) and panelized systems (pre-constructed sections like walls or roofing panels). In contrast, traditional construction takes place entirely on-site, where materials are delivered, assembled, and completed in sequence from the ground up.
Speed and Efficiency
One of the prefab’s strongest advantages is speed. Off-site production allows for simultaneous work on the building components and the site itself, significantly reducing overall project timelines. For CRE developers racing to meet market demand or deliver turnkey projects on schedule, this time savings can directly translate to reduced financing costs and quicker occupancy. Traditional construction, while time-tested, is often slower and more vulnerable to weather delays, subcontractor scheduling issues, and material supply challenges.
Cost Considerations
Prefab construction can lead to cost savings due to reduced labour requirements, minimized material waste, and shorter build times. However, those savings can vary depending on the project size and complexity. Transportation of prefab modules and the need for specialized equipment may offset some of the savings on certain sites. Traditional construction offers more flexibility with local labour and materials but may incur higher costs from extended timelines, weather disruptions, or design changes during the build.
Design Flexibility and Customization
Traditional construction provides greater design freedom, making it ideal for highly customized projects, heritage-style builds, or sites with irregular layouts. Architects and developers can adapt the plan on-site as needed, something that is more difficult with prefab, where much of the design must be finalized in advance. Prefab methods are improving in customization but still work best for repeatable or standardized designs such as hotels, student housing, modular offices, or rental units.
Quality and Sustainability
Prefab construction is known for its consistent quality, thanks to factory-controlled environments that reduce human error, improve precision, and allow better material control. These efficiencies can also lead to stronger energy performance and lower environmental impact through reduced waste. Traditional builds can match prefab in quality when managed well, but they are more susceptible to onsite errors, weather-related issues, and waste generation.
Site Constraints and Logistics
Urban sites or locations with limited access may pose challenges for prefab construction, especially for transporting large modules. Traditional construction allows for more flexibility in these settings, where materials can be brought in gradually and assembled incrementally.
Both prefab and traditional construction offer valuable benefits to commercial real estate projects, but the right choice depends on your project goals, timeline, budget and site conditions. Choose prefab if speed, repeatability, and sustainability are priorities. Opt for traditional construction if customization, flexibility, or site complexity are key factors.
References
Prefab vs traditional construction: Who wins [infographic]. Prefab Homes Ontario. (2023, December 9). https://prefabhomesontario.ca/prefab-vs-traditional-construction/
Roberts, T. (2025, February 13). Is prefab better than traditional building?. Rise. https://www.buildwithrise.com/stories/is-prefab-better-than-traditional-building
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