Feb. 17, 2022

Imagine building most of a hotel in a factory and then transporting it to the final location.

That’s the modular approach being used increasingly by the hospitality industry to improve efficiency and quality, according to Hegg Cos., which is investing in the approach in a big way.

Sioux Falls-based Hegg, known for development and construction, is adding a modular construction division, beginning with a 127,000-square-foot facility in Brandon.

“Construction as it stands today is a highly commoditized business, and we felt like this was a component we could add to our toolbox, so to speak, that would differentiate ourselves a little bit and give us a strategic advantage in the workforce, and we felt the timing was right,” Hegg Cos. president Paul Hegg said.

“We’re not inventing something. We’re just enhancing a methodology that works.”

In the case of a hotel, for instance, a modular approach includes building two hotel rooms with part of a hallway and then delivering it essentially in a large box to the building site.

“Within the box, you’ve got two completed hotel rooms, and I mean wallpaper on, carpet on the floor, a bed, a TV laying on the bed so it ships nicely, toilet fixtures in — I’m talking finished,” said Wade Behm, president of Hegg Construction.

“It’s really, really cool. Marriott and Hilton in particular have modular programs and are promoting this as the best deployment method for hospitality going forward. This is not new; it’s just not real prevalent in our area yet, but with all the labor woes and material acquisition, it’s time.”

This video from another modular construction factory shows how the approach works:

For a hotel, the Hegg facility could complete four so-called mods per day, so the pieces for a typical limited-service hotel would be ready in 25 to 30 working days.

“Once that is delivered to a site, they can take that hotel from a foundation and site work to a fully placed vertical structure in four to five days,” said Jared Vilhauer, vice president of development and finance for Hegg Cos.

The 16-acre site that will be used for manufacturing and storing the mods will be at the Encore Park development, which Hegg is developing on the west edge of Brandon.

The building will include two full lanes of production and the capability of storing 240 mods.

These are not heavily automated facilities, Behm said. The Hegg factory calls for about 125 employees.

“It’s a way better environment, and that’s something we’re focused on in this facility,” he said. “We want to create an environment that is safe, where you’re working on your tasks and ergonomics is key. So you’re working at tabletop level and having lifts and flat floors, a clean environment, all those things. The chaos of a job site is what causes problems.”

The controlled environment leads to a better worker experience and a better final product, Hegg said.

“And from the standpoint of speed to market … if I can open in nine months versus 12, that’s an advantage.”

The building is expected to begin production in November. Hegg Cos., which has its own hotel portfolio, is already seeing interest from clients, Behm said.

“We’re pretty pumped about the pipeline we’re creating just in our network, so once we get this out there, we’re excited about where the sales volume comes from,” he said.

The 108-acre Encore Park is north of Holly Boulevard on the west end of Brandon, with Ellis & Eastern Co. rail running through it.

It also includes plans for 300 apartments in a mix of traditional units and town houses. Hegg Cos. plans to do some of that construction in the modular style too.

“Our holistic approach to this is as a conduit to hopefully provide solutions to workforce housing in rural communities,” Hegg said.

“I don’t think a day goes by where we don’t hear about a small community that needs housing, but you can’t get people to go there and build it. They’re busy enough, and there aren’t the margins to go to a small rural community and build. If we can get 90 percent of the work done here inside the factory and then move to the site and do the finish work, that eases the potential problem.”

Work on the apartments is expected to start this year. There’s about 11 acres remaining for industrial-type users in the first phase of Encore Park, with an additional 40 acres available for future development.

“I’m a resident of Brandon and pretty excited about what this means for our community,” Vilhauer said. “We’ve really purposefully designed not only the manufacturing but the amenities with the employee experience in mind. I think it’s going to redefine what the employee experience should be, especially in the trades.”