Modular prefabricated buildings became a widespread construction solution in many developing countries during the Cold War period. Today, this building stock represents a significant portion of the existing urban fabric and is approaching or has exceeded its nominal service life as defined by contemporary building codes. Consequently, retrofitting interventions are increasingly necessary to address evolving structural requirements, particularly seismic safety standards. In addition to structural deterioration, these buildings were originally designed according to a minimal-functionality approach, characterized by limited living space and poor thermal comfort. Compared with contemporary residential buildings, they exhibit substantial performance gaps in terms of safety, energy efficiency, and habitability. Given the rapid urban and technological development occurring in many developing countries, the large-scale demolition of this building stock would entail considerable environmental impacts and would undermine the principles of sustainable development. This study presents the numerical analysis of a typical modular prefabricated structure and proposes an integrated retrofitting strategy. The philosophy of the proposed intervention is based on: (i) minimal alteration of the existing urban configuration; (ii) spatial reconfiguration to improve residential comfort; (iii) the integration of structural and thermal retrofitting measures to promote sustainability in the built environment; and (iv) the achievement of a favorable cost–benefit balance that supports future economic development. The investigation is conducted within the context of two cities in Albania. The research is organized into two main parts. First, the structural upgrading of the existing modular building is examined through numerical analysis. Second, the study evaluates the effects of the proposed retrofit on residential comfort and urban quality, considering both the individual apartment scale and the broader urban scale. The proposed retrofitting strategy demonstrates a significant improvement in structural performance, enabling the building to withstand even extreme hazard scenarios while satisfying the required safety standards with minimal impact.