Dmitry Yesilevsky never envisioned himself leading a construction company. That was until a friend of his, who is a real estate developer, approached him with a new opportunity.
Yesilevsky, a former personal trainer, joined his friend Marko Mackovic’s modular construction company called EcoMod in Hudson in 2023. The company transforms unused shipping containers into modular units that can be used to create multifamily, single-family and accessory dwelling unit homes.
EcoMod has big plans to help address Colorado’s affordable housing crisis. At scale, Yesilevsky says the company could have up to 37 employees building as many as 750 homes per year. They have already received interest from developers for about 11,000 modules, Yesilevsky said.
“The housing market here needs help,” he added.
But getting to the point where EcoMod can start making a dent in Colorado’s affordable housing struggles has been a challenge, Yesilevsky said. From extended timelines to receive state incentives to overcoming local land use issues, experts say more work needs to be done to support local modular builders and grow the state’s nascent modular industry.
Modular is having a moment
Modular building has become more popular as the affordable housing crisis worsens nationwide.
Modular construction is a method of building prefabricated modules off-site and then assembling them at the job site. This is much different from traditional construction, where nearly all building materials are delivered and used on-site. The Modular Building Institute, a Virginia-based trade group, estimates the process can decrease project timelines by between 30% and 50%.
EcoMod claims to have installed an accessory dwelling unit for a customer in as little as 30 minutes. Yesilevsky said the company can deliver a fully built modular home at around $140 per square foot compared with the average cost of around $375 per square foot, according to Colorado Builders Group. And that price includes renewable energy and green building features, he said.
Estimates suggest Colorado’s current affordable housing gap is between 106,000 and 180,000 homes. The state will need to build approximately 34,000 homes per year over the next decade to meet demand resulting from population growth, according to the State Demography Office. Between 2019 and 2023, data from the demography office shows that Colorado averaged building around 43,000 new units per year. However, construction activity has “slowed considerably” since then.
Colorado appears to have fully embraced the modular moment as well. Gov. Jared Polis signed Senate Bill 2 in May, which removed some regulatory barriers for modular construction projects. The state has also dedicated more than $70 million of funding from Proposition 123, which passed in 2022, to support the construction of 1,339 housing units, according to data from the Office of Economic Development and International Trade. OEDIT’s Innovative Housing Incentive grant program has supported another 1,029 units, while the Department of Local Affairs has financed eight modular projects totaling 89 units.
“Its flexibility and scalability allow us to meet diverse community needs with tailored, modern and durable housing solutions,” Shannon Gray, spokesperson for the state Department of Local Affairs, told The Sun in an emailed statement.
Modular construction has been particularly impactful in rural areas where building costs are high and labor shortages are prevalent, said Ted Leighty, CEO of the Colorado Association of Home Builders. For example, Fading West recently completed nine modular townhomes in Silverton. A municipal modular builder in Boulder called BoulderMod is building 50 townhomes in the Ponderosa Mobile Home Park. A subsidiary of Oakwood Homes is building 24 affordable homes in Leadville using modular construction.
Local regulatory hurdles are high
Even with the proverbial winds at their back, Yesilevsky said getting EcoMod’s shop up and running has been challenging.
Like many other real estate companies, Yesilevesky said financing was a major hurdle. In all, the company needed about $8.8 million to adaptively reuse a 64,000-square-foot Michelin tire factory for its warehouse and install the company’s proprietary technology. All of that work had to be done before they could start selling their first units, Yesilevsky said.
EcoMod is also pursuing Proposition 123 funding. However, Yesilevsky said it will take them about a year from the time they submitted their application until they receive their funding. A spokesperson for OEDIT said that the timeline is typical for some modular projects.
“Streamlining the regulations and getting factories certified would go a long way to supporting builders,” Yesilevsky said. “A lot of builders are facing similar issues.”
Local regulations for modular builders could also be revisited, Yesilevsky added. For example, Hudson’s town council considered annexing their warehouse as city property, which would have increased their operating costs through additional property taxes and utility fees. But, Weld County approved a permit allowing the company to remain in Weld County, where they pay less property taxes.
“We’re getting help from other manufacturers because they want everyone to succeed,” Yesilevsky said. “There’s enough demand out there for everyone to have their piece of the pie.”
Industry or building method?
Experts say the issues EcoMod has faced in getting its factory up and running are fairly common across the modular building industry.
One of the contributors is that it can be difficult to separate the industry from the building method. That makes it challenging to craft regulations and incentives tailored to meet the needs of these businesses.
There are dozens of companies in Colorado specifically focused on modular construction, one of the most well-known being Fading West in Buena Vista. However, general contractors like Hensel Phelps and Shaw Construction also use modular processes. In turn, the Department of Labor and Employment doesn’t have exact employment figures for the industry because these employees are captured under two industry codes.
Leighty told The Colorado Sun that Colorado’s licensing requirements may be contributing to the overlap. For example, a general contractor licensed to build in an area can use modular units from a modular builder that is not also licensed in the same area.
Those blurred lines also beg questions about the industry’s growth. DOLA, which oversees the state’s housing programs, says the market share of modular housing tripled between 2021 and 2024. Leighty adds that modular construction utilization has doubled over the last 18 months, making up 4% of newly built homes, because of Proposition 123 funding.
Going forward
Modular housing also appears to be one of the few issues that unites local lawmakers and experts across the political spectrum.
Attorney General Phil Weiser and Sen. Michael Bennet, both Democrats running for governor, told The Sun that they plan to continue efforts to support modular builders across the state.
“The promise of modular construction is substantial, and it is an important part of where the puck is going,” Weiser told The Sun in an interview.
Weiser compared the adoption of modular housing to the early push for renewable energy. He recalled working for fellow Democrat Gov. Bill Ritter’s campaign, where renewable energy was a core focus, and he said voters were initially skeptical about the policies. As scientific studies showed the benefits of renewable energy, that pushback died down in Colorado.
“Colorado needs to be the epicenter of housing innovation,” Weiser said.
Bennet said he plans to support modular builders to drive “innovation and optimization of the construction process.”
“My plan calls for a surge in housing,” Bennet said in an email. “To do that, we need to remove red tape for modular builders so we can make the most of this resource in Colorado. We also need to move faster. Administrative delays cost money and lead to increased housing costs.”
Industry experts say the support for modular is great, but it can’t exist in a vacuum. Scott Cox, principal at SLC Advisors, and Gene Myers, owner and CEO of Thrive Builders, argued in a recent column for The Builder’s Daily, a trade publication, that lawmakers should not consider modular building to be the magic bullet that solves the nation’s affordability challenges.
Instead, more attention needs to be given to reducing infrastructure and entitlement costs for builders, something the modular building process can’t fix on its own.
“While it makes sense for us, as builders, to look for every advantage and cost savings we can, politicians should stop avoiding the hard work of real solutions: entitlement reform and building infrastructure at scale, rather than putting it on the back of every individual project,” they wrote.
