The new iterative construction approach presented in this paper consists of three algorithms, namely, channel expansion routing, track assignment, and module location refinement. These algorithms, contrary to the conventional methods implemented with a sequence of tools separately, are linked with a common data structure which guarantees a maximal compatibility. With an initial nonoverlapping placement as input, the iterative construction approach generates a final layout with more compacted area than the layout result from the one-dimensional compactor or some of two-dimensional compactors. Several layout examples in the literature are tested to show the effectiveness of our approach.