2010The Voice of commercial modular consTrucTion™

the fast, affordable, efficient way to build.

Relocatable Buildings DivisionAnnual Report

about The modular Building institute. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

about the commercial modular construction industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

robert W. Baird financial survey results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-13

summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-19

CONTENTS

Above:

The Strata at Mercato sales

center in Naples, FL

Left:

Bridgewater State College in

Bridgewater, MA

Cover:

Dearcroft Montessori School

in Oakville, ON

Introduction

About the Modular Building Institute

founded in 1983, the modular Building institute (mBi) is the only international non-profit trade association serving the commercial modular construction industry. members are manufacturers, dealers and contractors of commercial modular projects, as well as associates supplying building components, services, and financing. members are located in 15 countries around the globe and provide all types of building space, from relocatable buildings to complex multi-story permanent construction projects. mBi’s mission is to grow the industry and its capabilities by encouraging innovation, quality, and professionalism through communication, education, and recognition.

for more information about the association visit, www.modular.org.

About the Commercial Modular Construction Industry

commercial modular Buildings are non-residential factory-built structures designed to meet federal, provincial, state and local building codes and in some cases designed to be relocated. The commercial modular building industry is comprised of two distinct divisions:

Relocatable Buildings – Buildings designed and constructed to be transported and installed efficiently and repeatedly that can be substantially reused in whole or in part at future building sites.

Permanent Modular Construction – an off-site construction process performed in a controlled setting yielding three dimensional modules transported and assembled at the building site.

This report focuses on the Relocatable Buildings division.

MBI StaffExecutive DirectorTom hardimanx 158, tom@modular.org

Operations Directorsteven Williamsx 153, steven@modular.org

Communications Managererin Whittx 152, erin@modular.org

Marketing SpecialistJoni lanex 156, joni@modular.org

Western Regional ManagerBob andoscabob@modular.org209-786-5116

Office Managerannie diggsx 157, ann@modular.org

Main Office944 Glenwood station lane, suite 204charlottesville, Virginia 22901 usaToll-free phone: 888-811-3288Phone: 434-296-3288fax: 434-296-3361info@modular.orgwww.modular.org

Western OfficePo Box 1057Valley springs, california 95252 usaPhone: 209-786-5116fax: 209-786-5114

PresidentJoseph lopardo Vice President, modular BuildingsWilliams scotsman

Vice Presidentmike ridley executive Vice PresidentBritco structures

Vice President ElectBrent morgan Vice President & General manageraTco structures & logistics ltd.

Past Presidentmarty mullaney President/ceosatellite shelters, inc.

SecretaryJohn lieffrig region Vice Presidentmodspace

TreasurerGary Bockrath cfoacton mobile industries

Executive DirectorTom hardiman executive directormodular Building institute

Board Membersrick Bartolotti Presidentuniversal modular Building solutions, inc.

michael Bollero President/ceosouthern modular industries, lP

Kendra cox Production managerBlazer industries, inc.

William duffield VP and General mangermcdonald modular solutions, inc.

Walter Griffin modular Program managermule-hide Products co., inc.

Garth haakenson ceo/PresidentPacific mobile structures, inc.

Gary humphrey VP of operationsPac-Van, inc.

John Kennedy managerm space holdings llc

harry Klukas senior VPBlack diamond Group

John michael cooatex distributing, inc.

Board of Directors

3

mBi estimates that there are approximately 400,000 relocatable buildings in use in north america, with the 10 largest dealers accounting for about 250,000 units in inventory. These buildings have an approximate total book value of $6 billion.

relocatable buildings are essential in cases where speed, temporary swing space, and the ability to relocate are necessary. These buildings are cost effective, code compliant solutions for many markets.

Primarily, four stages make up factory-built construction. first, design approval by the end user and any regulating authorities; second, assembly of module components in a controlled environment; third, transportation of modules to a final destination; and fourth, erection of modular units to form a finished building.

specifications for modular buildings are usually communicated to a manufacturer directly by a customer or through a dealer. dealers, responding to the space requirements of retail customers, work with customers to order new buildings from manufacturers and arrange for delivery and installation of the buildings when construction is complete. dealers usually offer a variety of financing and leasing opportunities and range in size from single, small sales offices with little or no lease fleet to large, well-capitalized companies with very large fleets.

modular manufacturers produce buildings generally in independent, single-location facilities. responding to dealer or customer requests, they generally operate as suppliers of modular units. construction primarily occurs indoors away from harsh weather conditions preventing damage to building materials and allowing builders to work in comfortable conditions.

customers served by relocatable buildings include federal, state and provincial, and local governments, school boards, corporations, non-profit organizations, retail establishments, healthcare providers, as well as individuals, partnerships, and sole proprietorships. other uses include medical facilities, airport facilities, military installations, restaurants, churches, and remote telecommunications stations.

rapidly deployable: no other method of construction allows for such rapid deployment of space. in cases of large scale natural disasters, code compliant relocatable buildings can be deployed within days to provide shelter, medical clinics, and classrooms to help restore a sense of normalcy to a community.

flexibility: some facilities are used as an adjunct to existing buildings, while others are stand-alone buildings. flexibility and reutilization are the hallmarks of relocatable buildings. unlike structures built on-site which generally have fixed utilization and occupancy design, relocatable units fulfill a unique function of reutilization that is not site-specific. it is not unusual to have a relocatable building serve a wide variety of users during its long life span.

The flexibility of these buildings makes them a secure investment. during severe economic downturns, these conditions allow lessors to enjoy cash flows adequate to service debt. This flexibility is further enhanced by the ability to relocate buildings to more prosperous cities or industries as opportunities arise. certain market segments of the industry are counter-cyclical. This is particularly true of education, prisons, and governmental agencies that want to transfer funding for facility needs from capital budgets to operating budgets. This concept also applies to industries that may want to expand but are uncertain about the long-term strength of their growth. Budget driven companies often opt for leased facilities. in such cases, modular buildings offer benefits and options without long-term capital commitments.

remote locations: Given that relocatable buildings are constructed off site in controlled settings, finding a skilled labor force in remote locations is less of an issue. from the hottest, driest desert locations to the coldest, most severe winter climates, relocatable buildings can be utilized anywhere.

shorter depreciation schedules: The primary difference between permanent construction and relocatable buildings is that in many cases, relocatable buildings are not permanently affixed to real estate. This allows for the building to be considered personal property or equipment and depreciated over a shorter span. While mBi provides a guideline in this appendix, it is important to consult a professional tax advisor on this matter.

Typically, relocatable buildings have a useful life of approximately 20 years if properly maintained, compared to 60 plus years for permanent facilities (capital improvements can extend the useful life of relocatable buildings).

Sleigh camp in a remote location in Russia

The primary benefits of Relocatable Buildings

Design by

Anderson Anderson

Architecture

54 Relocatable Buildings 2010

76 Relocatable Buildings 2010

Healthcare

relocatable buildings for healthcare applications are designed and constructed to uncompromising standards of quality. a customers new clinic, hospital extension, laboratory, diagnostic center, mri unit, dentist office, or other medical facility can be open for business and serving communities in as little as a few days. is your interest in serving patients as quickly as possible in the most safe and aesthetically pleasing environments available? These facilities offer quick, quiet, safe, and clean buildings with an unlimited choice of interior décor and furniture and equipment leasing.

Construction-Site & In-Plant

relocatable buildings have their roots in construction-site trailers, where speed, temporary space, and relocatability are important. used as standard field offices, construction-site and in-plant buildings are available for immediate delivery. standard construction is wood, but steel units are available to meet noncombustible requirements. in-plant buildings are available as single- or two-story units for industrial environments with noise-reducing insulation and are typically moveable by forklift and include electrical and communications wiring, heating, air conditioning, and even plumbing.

Security

relocatable buildings can be custom built for a variety of access and control situations. Toll booths, ticket sales offices, guard stands, and weigh stations are common applications. one- and two-story wood and steel buildings have straight walls or walls that are tilted to improve views and reduce glare. mBi members supply a full line of portable storage containers for either short- or long-term. heavy-duty storage units feature ground-level entry with double-swing doors for easy accessibility and are ideal for construction-site storage, equipment storage, warehousing, record keeping, industrial manufacturers, retailers, and others.

Equipment & Storage

economical and convenient equipment and storage buildings offer on-site protection from inclement weather and theft. day in and day out, relocatable buildings offer durability and strength. equipment shelters for construction sites, chemical storage buildings, temporary generator housing, and other applications are designed and built by mBi members to guard a client’s investment. These buildings can be as simple as steel containers to units that are heated and air conditioned with exteriors of brick, stone aggregate, or stucco.

Education

relocatable buildings have become a critical factor in managing student demographics and increasing enrollments. relocatable classrooms are also ideal for swing space during new construction or renovation. convenient, flexible, cost-effective temporary buildings can be delivered and operational in as little as 24 hours. These classrooms are measured for quality and code-compliance by state or third-party agencies through routine and random inspections, testing, and certification services. choose single classrooms or arrange multiple buildings in clusters to create a campus feel. mBi members supply steps, decks, ramps, and even furniture. members also offer lease, purchase, and lease-to-purchase financing for a variety of public and private school needs. These classrooms are sometimes referred to as temporary, portable, or mobile classrooms.

Retail

earlier occupancy means quicker return on investment. for retail occupancies, this can mean significant cash flow advantages. standard floor plans are available for immediate delivery while custom buildings are built to customers’ specifications in weeks, not months. unique to modular construction is the fact that while buildings are being built in a quality-controlled factory, site work is occurring at the same time.

Typical retail applications include new home sales centers, banks, golf pro shops, automobile dealerships, college bookstores, and concession stands. if a client’s emerging business needs are short term, temporary space will accommodate their financial situation, space requirements, and deadlines.

General Office

When production demands increase, relocatable buildings can temporarily enlarge a current facility without permanent alterations to the site. Because the space is not permanent, many companies are able to expand without the budget approval process necessary for traditional capital expenses. relocatable offices can be single- and multi-story buildings configured to include independent offices, conference rooms, and large open spaces for cubicles or other partition systems. large and small businesses, as well as local and state governments, are typical users of relocatable office space.

Markets Served

Classroom at the Carroll School in Lincoln, MA

Sales center in Haverford, PA

98 Relocatable Buildings 2010

There is simply no other means of providing fast, transitional shelter and basic community needs following natural disasters than relocatable buildings. relocatable buildings can be quickly and efficiently deployed for emergency housing, medical, educational needs, or to accommodate relief workers.

earthquakes in haiti and chile left hundreds of thousands of people without homes, schools, medical facilities and clean drinking water. following haiti, the modular Building institute formed an alliance with associated Builders & contractors called sTarT (start Today and rebuild Together). sTarT was formed to leverage the resources of the construction industry, nongovernmental organizations (nGos) and government agencies to respond quickly and efficiently with relief and rebuilding efforts following natural disasters. The alliance was able to raise over $40,000 cash and in-kind donations to facilitate the delivery of two modified containers loaded with supplies for the victims of the earthquake.

additionally, many companies made direct donations and contributions to various non governmental agencies in haiti and chile. Built to u.s. codes and readily deployable, the commercial modular construction industry was able to reply to these disasters as quickly as logistical details allowed for the agencies to receive the buildings.

Emergency Housing &

Disaster ReliefData Collection

data for this report was compiled from previously conducted quarterly reports collected and analyzed by robert W. Baird company. in 2006, mBi entered into an alliance with Baird to conduct these surveys to determine various trends within the industry. approximately 30 to 40 dealers and manufacturing companies (both members and non–members of mBi) participated in the quarterly surveys. in addition to the Baird surveys, mBi obtained data from a variety of sources including a prepared survey questionnaire sent to members and non-members in the industry, public sec filings, information obtained from state and provincial modular regulatory agencies, and direct communication with company leaders.

Interior

Fast, functional space rapidly deployable in

times of emergency

About Baird

Baird, established in 1919, is an employee-owned, international wealth management, capital markets, private equity and asset management firm with offices in the united states, europe and asia. Baird’s principal operating subsidiaries are robert W. Baird & co. in the united states and robert W. Baird Group ltd. in europe. Baird also has an operating subsidiary in asia supporting Baird’s private equity operations.

robert W. Baird & co. is a member of the new York stock exchange and other principal exchanges and the securities investor Protection corporation (siPc). robert W. Baird ltd. and Baird capital Partners europe are authorized and regulated in the united Kingdom by the financial services authority.

The relocatable buildings segment tends to track with overall construction and equipment rental activity. an increase in new construction starts generally means an increase in construction site office rental and transitional or swing space needs during construction.

in 2009, the commercial construction market in the u.s. declined by 12.4 percent. however, in markets where the modular industry is active, construction activity declined as follows:

lodging (hospitality) -46.1%office -26.2%commercial -35.0%health care -7.6%educational -5.6%religious -16.1%

Three of the largest equipment rental companies in north america reported an average decline of 18.97 percent in rental revenue for the first quarter of 2010 compared to the previous year.

statistics canada reports similar trends for 2009 construction activity, showing an overall decline of 11.5 percent. however, in alberta where the modular industry has the strongest presence, overall construction activity was down 25.9 percent.

Festevents at Town Point Park in Norfolk, VA

1110 Relocatable Buildings 2010

“over the next 12 months, at what rate do you forecast your leasing revenue will grow, excluding acquisitions?”

Quarter Percent Forecasted 1Q10 0 4Q09 -1 3Q09 +2 2Q09 +4 1Q09 -3 4Q08 +6 3Q08 +8 2Q08 +8 1Q08 +9 4Q07 +10 3Q07 +7 2Q07 +10 1Q07 +13

“during the recent quarter, how much has the average rental rate increased or decreased compared to a year ago?”

Quarter Percent 1Q10 -6 4Q09 -5 3Q09 -4 2Q09 -4 1Q09 +4 4Q08 +3 3Q08 +4 2Q08 +7 1Q08 +2 4Q07 +4 3Q07 +6 2Q07 +6 1Q07 +2

many factors influence rental rates including competition, geography, and the quality and type of inventory available.

Manufacturer Data:

dealers are companies that typically maintain an inventory of new and used relocatable buildings available for sale or lease.

“during the recent quarter, by how much has leasing revenue increased/decreased compared to a year ago, excluding acquisitions?”

Quarter Percent 1Q10 -7 4Q09 -5 3Q09 -9 2Q09 -4 1Q09 -10 4Q08 + 8 3Q08 + 9 2Q08 +14 1Q08 +12 4Q07 +12 3Q07 +12 2Q07 +16 1Q07 +14

Robert W. Baird Financial Survey Results

on average, dealers typically derive 25 percent of revenues from leasing activity (40 percent from sale of new units; 10 percent from sale of used units; 25 percent from installation, service and other value added products)

“during the recent quarter, by how much has unit sales growth revenue increased/decreased compared to a year ago, excluding acquisitions?”

Quarter Percent 1Q10 -12 4Q09 -20 3Q09 -4 2Q09 -10 1Q09 +13 4Q08 +9 3Q08 +1 2Q08 +12 1Q08 +1 4Q07 +6 3Q07 +18 2Q07 +10 1Q07 -4

“over the next 12 months, at what rate do you forecast your unit sales revenue will grow, excluding acquisitions?”

Quarter Percent 1Q10 +2 4Q09 +7 3Q09 +5 2Q09 -2 1Q09 +7 4Q08 +9 3Q08 +8 2Q08 +22 1Q08 +5 4Q07 +7 3Q07 +9 2Q07 +7 1Q07 +22

“during the recent quarter, how much has average utilization rate increased or decreased compared to a year ago?”

Quarter Basis Points (100 = 1%) 1Q10 -90 bps 4Q09 -250 bps 3Q09 -650 bps 2Q09 -350 bps 1Q09 -450 bps 4Q08 -350 bps 3Q08 -100 bps 2Q08 -150 bps 1Q08 -200 bps 4Q07 0 bps 3Q07 -150 bps 2Q07 -100 bps 1Q07 0 bps

“during the recent quarter, by how much has the cost of new units increased/decreased compared to a year ago?”

Quarter Percent 1Q10 -3 4Q09 -3 3Q09 -3 2Q09 -1 1Q09 -6 4Q08 +3 3Q08 +3 2Q08 +6 1Q08 +3 4Q07 +1 3Q07 +1 2Q07 +4 1Q07 +4

“over the next 12 months, at what rate do you forecast your fleet spending will increase compared to the prior 12 months?”

Quarter Percent 1Q10 +3 4Q09 -8 3Q09 -10 2Q09 -17 1Q09 -18 4Q08 -14 3Q08 -22 2Q08 -2 1Q08 -12 4Q07 -2 3Q07 +19 2Q07 +11 1Q07 +8

on average, dealer utilization rates have been flat or decreasing for the past 13 quarters. at year end 2009, dealers reported an average utilization rate of approximately 66.1 percent. as a point of reference equipment rental companies have reported fleet utilization rates in the mid 50 percent range for the first quarter of 2010.

utilization is commonly determined by dividing the total number of units on lease by the total number of units available, or alternatively by dividing the cost of the units on rent by the total cost of the equipment available. some companies have reported utilization rates in the high 80 percents, while others report rates below 50 percent. The local economy, geographic markets served, as well as fleet composition play a major role in fleet utilization.

25% leasing activity

40% new units10% sale of used units

25% installation, service & other value added products

Renovated relocatable office in Rochester, IN

1312 Relocatable Buildings 2010

revenue per dealer varies significantly, but averaged $17,118,329 across the board. a few dealers maintain a national/international footprint with multiple branch locations. The average revenue for these companies is several hundred million, and in some cases approaches $1 billion annually.

There are also several regional dealers with branches in multiple states and territories. average revenue for this group is in the $30 to $60 million range. finally, there are numerous independently owned small dealers with one or two local branches. Typically, these dealers generate less than $10 million in annual revenues. about 60 percent of all inventory of relocatable buildings in north america is controlled by the 10 largest dealers, with 80 percent controlled by the top 20 largest dealers.

effective age of the lease fleet in a typical dealer’s inventory is approximately six years. Twenty percent report an effective age of 1-3 years, 70 percent reported 4-10 years, and less than 10 percent of respondents reported the average age of lease fleet as greater than 10 years.

in order to recoup the initial capital investment in a unit, a dealer typically needs to have the unit on lease for about 44 months. once the initial investment is recouped, it is not uncommon for a dealer to continue leasing the unit to recover the investment a second time, and finally sell the unit (on average after eight to ten years on lease) at an average sales price to original cost ratio of 112 percent of the original investment. it should be noted that these are averages and actual results depend greatly on the type and condition of the unit.

on average, dealer respondents reported a gross profit margin of 25.87 percent, and a net profit margin of 8.67 percent. again, results will vary based on a company’s particular business model. for example, gross margin on leasing activity is typically higher than on the sale of new units.

dealer fleet composition – dealers indicated that approximately 30 percent of the lease fleet is comprised of classrooms or educational units; 24 percent construction site offices; 17 percent general offices; 10 percent retail/hospitality; 8 percent healthcare; 4 percent industrial; and 7 percent “other.”

30% classrooms or educational units

24% construction site offices17% General offices

10% retail/hospitality

8% healthcare

4% industrial 7% “other” (Kiosks, guardhouses, security)

When asked about depreciation and residual values of the lease fleet, responses varied based on condition and capital improvements to the fleet, market use of the fleet, and the composition of the types of units in the lease fleet (storage containers, construction offices, classrooms, etc.).

The economic value of a leased mobile office or modular building is determined by comparing the total cost of the asset with the income producing capacity over its useful life. cost includes the initial manufactured cost plus all expenditures for items such as maintenance and taxes incurred during its useful life. income includes lease revenue during the buildings useful life and sale value upon disposition. residual value is understood to be the anticipated “value” of the building at the end of the lease.

Typically, a relocatable building is depreciated over a 20 year period with up to a 50 percent residual value. While this varies by company, most dealers fall within these guidelines. This depreciable life should not be confused with the actual economic life of the building, defined as the period at which it is cheaper to replace the asset than to continue maintaining it. in many cases, the economic life of a building can last well beyond 20 years if properly maintained.

Child Care Center at Harvard University

1514 Relocatable Buildings 2010

Architecture for Humanity design competition

The modular Building institute (mBi) recently sponsored the 2009 open architecture challenge design competition hosted by architecture for humanity, the non-profit group established to “build a more sustainable future through the power of professional design.” The competition was divided into three categories: urban classroom upgrade, rural classroom addition, and the mBi-sponsored category re-locatable classroom design.

The winner of the re-locatable category, selected from over 50 entries is druid hills high school in Georgia for their project designed by Perkins+Will. mBi, through its foundation, awarded $5,000 to help facilitate the building of the design project.

“We are proud to have worked with architecture for humanity on this worthwhile project, and hope to help move schools and our industry forward towards higher performing classrooms,” said Tom hardiman, executive director of the modular Building institute.

The primary function of re-locatable classrooms is to provide additional educational spaces to existing school facilities, most often on a temporary basis.

Above:

First Place Winner

Designed by Perkins+Will

Right:

Semi-finalist

Designed by Liollio Architecture

The re-locatable classroom implements cost-conscious building materials to create a learning environment which can be adapted to any environment. The re-locatable classroom offers students and teachers:

• Sustainable Learning Environment: operates with significantly lower utility costs due to sustainable design features such as sun shades, integrated rainwater collection, photovoltaic roof panels, use of sustainable materials, generous daylighting, operable windows and natural ventilation.

• Flexibility in the Design, Usage and Teaching Styles: The interiors are comprised of walls which slide to reveal breakout learning space, storage, glazing or teaching surfaces. each side of the re-locatable classroom serves a different purpose, whether it is a wet wall with bathroom facilities, a glass wall which opens to provide access to an exterior classroom space or a deep wall that provides ample storage.

• Healthy Learning Environment: unlike typical school trailers, this classroom was designed with children’s health and various learning styles in mind. This classroom’s environment is adaptive and is equipped to meet all of the needs of the students.

1716 Relocatable Buildings 2010

This segment of the modular industry plays a critical role in providing affordable, code compliant space solutions in a fast and efficient manner. like the construction industry in general, dealers of relocatable buildings experienced downturns over the past 12 months. however, markets such as disaster relief and contingency housing did emerge and develop as more government agencies and non-profit groups realized the intrinsic benefits and ease of acquisition and deployment of these buildings.

mBi anticipates that demand for these buildings will closely track the construction industry as a whole, and anticipates an upturn in activity over the next 12 months.

Summary Appendixselected regional label report

region 2005 2006 2007 2008 2009alberta (red labels) 4,572 6,237 7,252 7,713 1,916indiana (mobile) 2,378 2,397 3,722 3,868 n/aindiana (modular) 3,470 3,820 3,524 3,441 n/amaryland 2,636 2,422 2,739 1,538 602industrialized Building commission (nJ, ri, mn, nd) 3,603 3,275 3,210 2,520 867Texas 4,390 5,099 5,745 4,234 2,136Washington 1,131 765 1,121 727 n/aGeorgia 3,675 4,547 3,946 2,811 1,726california (hcd) 4,643 5,285 4,025 2,733 1,749

Depreciation/Residual Values

The economic value of a leased mobile office or modular building is determined by comparing the total cost of the asset with the income producing capacity over its useful life. cost includes the initial manufactured cost plus all expenditures for items such as maintenance and taxes incurred during its useful life. income includes lease revenue during the buildings useful life and sale value upon disposition. residual value is understood to be the anticipated “value” of the building at the end of the lease.

The mean annual depreciation has ranged between five percent to six percent for the last several years.

While there is no specific irs ruling pertaining to depreciation of modular buildings, the following are intended to be general guidelines:

always consult a professional tax advisor.

Visit the irs Web site for additional resources:www.irs.gov/publications/p946/index.html

The determination as to which depreciation recovery period to apply to the building is based upon whether the property is considered real or personal.

Generally speaking, the buildings (modular units) alone do qualify for a faster depreciation than real property. however, once affixed to a foundation, the decision as to whether the property is real or personal (temporary or permanent) falls within the jurisdiction of the local code official.

To help determine if a property is considered real (permanent, not intended to be moved), consider the following:

The question of real vs. personal can be answered by both investigating the original building design and a term called inherent permanency. inherent permanency is a definition that addresses the question of “is this structure designed and intended for permanent use?” This issue is relevant, as nearly any structure can be moved. To the extreme end of that scale, the london Bridge was moved to arizona—but certainly no one will say that this represents relocatability. The question of inherent permanence asks at what point you can consider a structure easily movable and when is it not easily relocatable or reasonably achievable.

Sales Center and Club House in Holly Springs, NC

1918 Relocatable Buildings 2010

4. how substantial a job is removal of the property, and how time consuming? The job of removing the modular sections of the structures is facilitated by the very initial design and manufacture of the sectional units. Because of the inherent sectional design, disassembly time is minimal. Typical of costs, including time consumed and materials for disassembly and removal are less the 20 percent of the replacement costs of the total structure.

Typical disassembly time is less than the time spent in the initial assembly.Typical removal includes disassembly and transportation to another site or to storage. once in storage, the sectional units may again be transported and reassembled or reconfigured to suit the needs of the next lessee or owner. it is common industry practice to inventory sectional units, and re-configure on a site, as directed by the lessee or owner.

The question of cost, time and intrinsic design provide the contrast between readily relocatable and improbability and costly relocation of a structure.

5. how much damage will the property sustain upon removal? since these sectional units are inherently designed, manufactured, and transported in sectional format for site coupling, these units suffer minimal damage during disassembly. Typically disassembly and removal damage is less the 10 percent of replacement costs to the property. once disassembled and transported, each sectional unit is capable of being readily re-used in another application or site.

site restoration costs are minimal after removal, and are usually addressed in contract language; therefore the intent to remove the structure is an integral part of the design and application. contract leases typically specify that the structure is personal property in finite land and structure leases.

6. What is the manner of affixation to the property to the land? for the non-residential modular industry, the manner of affixation to the property is typically determined by local prevailing model construction codes. The manner of affixation to the site is not an indication of intent of permanence, rather it is commonplace, as most states have a preemptive state-wide construction code for the structure, and local agencies determine appropriate foundation, utility, and land use issues.

The affixation between the structure and the foundation system can be varied. With pier and pad systems, it is gravity or bolted systems or tack-welded systems. The attachment to the foundation is determined by structural requirements and not by intention of permanence. Typical foundation systems used in conjunction with modular units allow for ready return to pre-installation status with little or minor site reconstruction costs. foundation selection factors include wind, seismic, support, use, and access requirements in determination of appropriate systems. Typically, the termination of real or personal property is not one of the factors in the selection of foundation systems.

utilizing the six-way test that was established in the federal court cases of Whiteco and further used extensively in the fox Photo case (a modular commercial structure), the courts recommend that it be viewed under the six-way test as established in the Whiteco case:

1. is the property capable of being moved and has it in fact been moved? To facilitate off-site construction, modular construction requires the manufacture and transport of sectional units from the factory to another site where they will be connected together. The practice of assembly and disassembly of modular units is an everyday industry occurrence. The modular units are designed to be legally transported from the factory over the public highway before use, therefore, reuse after disassembly is commonplace in practice and intended. further, under contractual obligation, typically the structure must be removed at the termination of the contract when needed. This most likely will not be the case for on-site constructed facilities.

2. is the property designed or constructed to remain permanently in place? non-residential modular construction typically is designed and manufactured to be readily relocatable. foundation systems that are used by modular structures are a function of compliance with locally prescribed model construction codes to support the structure. depending on the prevailing local construction codes, foundation systems, not the structure, may or may not be sedentary or appear to be permanent.

for buildings leased, the term of the average original operating lease contract is, typically less than five years. at the termination of the lease, the structure must be removed from the site, relocated, and then would be utilized at another site.

since the structure’s modular units are initially intrinsically designed to be transported for highway movement from the factory to the first site, these structural units maintain their transportability for secondary and subsequent moves. for these secondary moves, the act of disassembly typically does not substantially damage these sectional modular units. additionally, it is common that once the modular units are removed, many of these units may be inventoried, re-configured, and reused at other sites.

3. are there circumstances that show that the property may or will be moved? The term of the lease or the use of the structure dictates the removal of the modular sections. at the termination of the lease or use, the lessor or user is required to disassemble and transport each of the modular section to another site or return to inventory for re-use at a later time.

since these structures are initially constructed in a remote factory, this design allows an industry-wide marketing application of short use of the structure in one location and the ready relocation to another site. This practice is prevalent in the educational, office, airport, institutional, restaurant, correctional, and medical facilities’ markets, among others.

since these structures have been transported over public highways at least once, the ability exists universally to disassemble and re-transport sectional units with minimal costs for permits and transit. The fees to obtain local disassembly permits are nominal in cost as well. Waldorf School in Charlottesville, VA

Design by Anderson Anderson Architecture

2120 Relocatable Buildings 2010

MBI 2010 Package SponsorsmBi sponsors are commercial modular construction leaders who align themselves with mBi in a collaborative effort to promote the

industry, educate participants within the industry, and ensure a positive and ethical business environment throughout the industry.

We gratefully acknowledge our diamond Preferred, Titanium, Platinum, Gold, and silver sponsors:

Notes

© 2010 modular Building institute, all rights reserved.All products are trademarks or registered trademarks of their respective owners.

Williams Scotsmanwillscot.com

M Space Holdingsmspaceholdings.com

Firestone Building Productsfirestonebpco.com/roofing/modular

ModSpacemodspace.com

Satellite Shelterssatelliteco.com

Above:

Tyler Stanley - Finalist in

Architecture for Humanity’s

Design Competition

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Oakleaf School in

Orange Park, FL

modular Building institute 944 Glenwood station lane, suite 204

charlottesville, Virginia 22901 usaToll-free phone: 888-811-3288

Phone: 434-296-3288fax: 434-296-3361info@modular.orgThe Voice of commercial modular consTrucTion™