Steve Kleber, founder of integrated communications firm Kleber & Associates, and I recently sat down to discuss the latest trends in the building industry and how building product brands can leverage current conditions to best grow their businesses. It’s an exciting time to be in the industry, and it was a unique treat to have the opportunity to exchange thoughts in a mutually inspiring conversation.
~ S. Robert August, president of North Star Synergies,
NAHB Global Opportunities Board
So far, 2021 is proving to be the most interesting year since the end of World War II. And we’re only a little over halfway through the calendar…
When U.S. GIs returned home from the front in 1946, they found housing, commercial and retail weaknesses. The nation’s infrastructure desperately needed repair. In response, both private and public segments of the country stepped up and adapted to the needs of the marketplace.
Change — along with the ability to “pivot” — has always been necessary to propel the industry forward. This is especially relevant for building product brands to recognize now… and to modify action plans at this significant inflection point in history. Or risk being left behind by competitors, who are reimagining their products and experiences. Preparing to leap forward into an exciting period of growth.
The Pandemic Effect
In this week’s reporting, real GDP surged and has returned to the pre-pandemic level… as the economy continues on its path to reopening. Based upon “advance” estimates released by the Bureau of Economic Analysis, GDP increased at an annual rate of 6.5% in the second quarter… following the first quarter’s impressive 6.3% gain.
The pandemic has helped us all become even more aware of health and wellness. It has also impacted the building products industry through national and international supply shortages — and associated escalating costs — while also stalling production in many cases.
Much of the workforce has learned how to work remotely, which of course, has been a boon for digital conferencing. Yes, companies still need conference rooms, offices, breakout rooms, accounting storage, kitchens, and reception areas. However, commercial space utilization is being reconsidered. Trends such as office sharing are becoming increasingly popular as companies look at different ways of configuring spaces.
The commercial and residential industry has been forced to adapt and “fast forward” in its response to market changes. And, as a result… we are now experiencing renewed ingenuity, creativity, and innovation in both the private and public sectors.
For builders and developers, it’s all about learning to rethink and adapt construction techniques. Partner with new manufacturers. Adopt innovative products. Seek out new distribution resources. And educate the trades with updated installation and scheduling programs for mutually rewarding survival and profits.
For building product brands, this shift presents a significant opportunity to get more products and solutions in front of more influencers. And decision-makers in the A&D channel. As well as dealers, distributors, and their builder/contractor audiences.
A New Way of Looking at the Home
Nationwide, we are experiencing a deficit of 6.8 million homes, according to a new report from the National Association of Realtors (NAR) and the National Association of Home Builders (NAHB). These organizations currently are asking lawmakers to advance housing investments in a new infrastructure package. It is estimated that it will take four to five years to provide the housing stock required to fulfill demand.
To meet this growing need, many developers are considering re-zoning their buildings, campuses, and future developments. While still, other builders have transitioned into a different residential sphere by way of the single-family build-for-rent market… which we wrote about in a recent article.
Despite stiff competition for the lack of available homes, and bidding wars permeating the industry, the recent pandemic caused most homeowners to look at their homes differently. The home has now become a retreat. And a place where we not only live, eat and sleep, but also — in many cases — work and help educate our children. Interest rates remain low… allowing homeowners the opportunity to move. Notwithstanding, many people are opting to stay in their homes longer and take advantage of rising equity values to remodel.
In response, the remodeling industry has risen to its highest performance levels and this growth is forecast to continue during the next three years.
Advanced Features Move to the Forefront
With remodeling top of mind, builders, developers, and consumers are carefully looking at every available square foot and cubic inch. As a result, the expectation is that residential spaces will include key features such as:
- More cabinetry, organized storage and home offices
- Smart home technology
- High-performance appliances
- Sustainable plumbing and energy solutions
- Well-insulated exterior windows and doors
- Water / air filtration and purification
- Health and wellness products aimed at eliminating toxins and chemicals
- Increased building standard performance
- Exterior and interior walls, floors, ceilings and roof systems that are resistant to fire, wind, earthquakes, floods, and insects and vermin
- Landscaping enhancements — xeriscape plans and installation
- Electric vehicle charging ports
- Package delivery rooms and “Costco” closets
- Indoor electric fireplaces
- Outdoor fireplaces, firepits as well as BBQ stations and kitchens
Other important trends include incorporating universal design enhancements to ensure that the 25 percent of the population that are repurposing their homes — can “live in place” — rather than move into costly well-care and assisted care environments. And live more comfortably. And even safer.
In addition, it is becoming increasingly common for multiple generations to reside in one home. Instead of living in smaller single-family homes, some families are leveraging dual incomes and assets to purchase and move into larger, state-of-the-art homes… with several main bedroom suites. What’s more, unmarried friends and acquaintances are also purchasing residences collaboratively to enjoy the benefits of homeownership.
Many homeowners are transforming basements and converting attics into living areas complete with bedrooms, bathrooms, and kitchens. And accessory dwelling units (ADUs) continue to gain traction, especially in locations where land is scarce and homeownership is often cost-prohibitive.
These trends all point in the direction of significant opportunities for brands to leverage the increased desire to update living spaces with innovative, high-quality products — a trend that will only grow as people re-assess the elements of a “healthy, versatile, high-performance home.”
Not Your Traditional Amenities
Beyond the features found within homes, many residents are seeking out amenity-rich neighborhoods… especially those that offer outdoor walking and jogging trails, swimming, tennis, and bocce courts. On the other hand, golf club and equestrian communities are on a gradual decline, as city courses and resorts typically exist near neighborhoods.
Instead, community centers for exercise, yoga, cooking, health, and wellness… as well as education “experience programs” are becoming more important than ever. Where land density allows, “farm-to-table-to-fork” communities are emerging throughout the U.S. And where space is more limited, some inner-city dwellings are integrating roof-top agrarian environments.
Professional Education Elevates the Industry
Building product marketers must ramp up their efforts to dovetail with industry professionals from commercial, planning, and residential trade associations… to further enhance their understanding of how to adapt to the change necessary to compete effectively.
Trade associations such as NAIOP (Commercial Real Estate Development Association), NAR, Urban Land Institute, and NAHB will continue to be crucial for aligning the pulse of the homebuilding industry. The NAHB alone has more than 130,000 members… representing companies that employ over 10 million building employees.
Building product brands are encouraged to participate in both national and regional educational programs presented by these organizations — especially as in-person events begin to resume — to perfect old skills. And to learn new “best practices” from leading industry professionals.
Additional courses are available through affiliated industry organizations such as the Living in Place Institute and Wellness Within Your Walls. Both are excellent educational certification programs that offer valuable knowledge and how-to advice… along with important networking opportunities.
Financing Challenges… and Opportunities
In most markets, it continues to cost more to reside in a two-bedroom apartment than owning a condominium, townhome, paired home… or even a single-family home. The incentive to own continues to increase.
Credit preparation and education classes are now being offered by mortgage bankers to help potential borrowers prepare to engage in the home buying arena. And new permanent mortgages and refinancing mortgage instruments will be created to assist buyers and homeowners interested in refinancing.
There will also be an increased emphasis on helping people — who are seeking better performing home environments — achieve energy efficiency and water conservation, as well as a toxin and chemical-free environments.
Prepare, Plan, Take Action
How will your building product brand evaluate business development opportunities? Prepare for them? And implement your next plan of action to attract customers today and tomorrow? How will you capture the attention of — and engage with — the most qualified industry professionals to help you propel your brand forward? What are your plans to “grow beyond”?
All important considerations… as we move forward into the next evolution of the home and building industry.