Mattamy Homes founder Peter Gilgan to start prefab housing factory in Ontario

Globe and Mail

2 days ago

Real estate developer Peter Gilgan plans to start a home-building factory in the Toronto area, the billionaire's second attempt to create a prefabricated homes business as the federal government looks to boost construction of new homes.
Mr. Gilgan, whose Mattamy Homes is one of the country's largest home builders, opened a prefab home factory in the late 1990s only to shutter the money-losing venture about a decade later.
This time, the climate appears to be more conducive. The technology is available to make prefab homes faster. And all levels of government are under pressure to create affordable housing, with many Canadians shut out of home ownership or struggling to pay rent. 'Now is the time to try this again,' said Peter Hass, general manager of the new venture, called Stelumar Advanced Manufacturing Inc., which expects to produce modular components for about 3,000 housing units a year once its factory opens.
The first phase, slated to open in 2026, will focus on making modular parts and components for six-storey condo buildings with one- to three-bedroom units, Mr. Gilgan said in an interview. He expects the factory to help slash construction timelines for such structures to less than six months, down from as much as three years.
'I'm trying take a lot of the things that are very boring, laborious, time consuming, tedious work on the job site, and prebuild, preinstall in the factory in a different way than has ever been done before,' Mr. Gilgan said. That includes finding a different way to fireproof and soundproof components of the home before they leave the factory.
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Although Prime Minister Mark Carney singled out prefab homes as part of the solution to speed up the pace of home building, Mr. Gilgan said Stelumar has been in the works for more than a year.
Mattamy will be Stelumar's first customer and Mattamy's parent company, Mattamy Asset Management, is Stelumar's main investor. Mr. Gilgan said Stelumar has already spent tens of millions of dollars to develop new technology for fireproofing and soundproofing, design the six-storey condo buildings and housing units, hire consultants and key personnel. Mr. Hass, a previous employee of affiliate Mattamy Ventures who joined in September, said the company has hired 12 people and expects to employ more than 300 once the factory is operating.
Mr. Hass said the factory will cost hundreds of millions of dollars to set up, primarily for equipment made by European suppliers, which will be partly debt-financed. Mr. Hass said Stelumar may bring on other investors and will also look to 'work with the federal government on fundraising. The main benefit would be that we'll be able to accelerate what we plan to build way quicker' if the company can secure public aid.
Mr. Gilgan expects Stelumar's output will translate into lower construction costs and home prices. When asked how much the cost would come down for the buyer, he described the amount as 'holy smokes.' Mr. Carney's campaign said that prefab and modular housing could reduce construction times by up to 50 per cent and costs by up to 20 per cent. Mr. Gilgan said: 'I would say he is significantly accurate.'
Construction is not the only big expense. The cost of the land, government development charges and taxes also contribute to the price of a home. As well, permits and building approvals can slow the home building process.
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There has been little demand for new homes for the past year, with borrowing costs still high and prebuilt homes selling for less than preconstruction homes.
Asked if there would be demand for his prefab homes, Mr. Gilgan said his products will meet people's needs. Stelumar homes will be larger than the newly built condos on the market today. For example, a one-bedroom made with its modular parts will be 700-plus square feet, compared to 600 square feet or less for many newly built one-bedroom condos.
Setting up Stelumar is personal for Mr. Gilgan. Stelumar – named after three of his children, Stephanie, Luke and Markus (Mattamy is named after two other children, Matt and Amy), was also the name of his first prefab home factory, which made single-family detached homes that were transported whole to construction sites.
Mr. Gilgan said the technology wasn't advanced enough and that the operation was unprofitable. Asked if he though the new Stelumar could make money, he replied, 'Absolutely. Having learned from the mistakes that I made 25 years ago, I think I'm pretty well equipped to know what will work.'
Mr. Hass said Stelumar is close to selecting a site in the Greater Toronto Area. Stelumar plans to source at least 75 per cent of its materials from Canada, which would help the company get around the higher costs associated with the trade war with the U.S.
Mr. Gilgan characterized Stelumar as a personal project to make home ownership more affordable for young adults. 'People want to own a home. We're trying to give them the opportunity to live that dream.'