Pencil Sharpeners
Remodelers in these cities report refining their budgets, running lean, and doing a stable amount of work but with fewer people or within a tight market.
People in the The City of Brotherly Love have to count themselves lucky when they compare housing costs here to those in New York City an hour and a half up the road via the New Jersey Turnpike. It’s less expensive to live in Philadelphia, where employment is powered by government, health services, and education but is simultaneously hampered by a cash-strapped city and its struggling school district. Local remodelers are starting to see some rebound even with unemployment — at 10.9% in September 2011 — two points above the national average. “I can tell you that 2011 is definitely better than last year, by a lot,” says Bob DuBree, who expected sales at his company, Creative Contracting, in the Bucks County suburb of North Wales, to be up about 25% over 2010. Bathrooms — more in 2011 than in the previous five years combined — helped lift Creative Contracting’s numbers. For some companies, a relatively healthy commercial construction market has helped make up for slack demand in residential renovation caused by slow housing sales and scarce credit. “Our commercial business has definitely increased in the last six months,” says Mark Pennington, secretary/treasurer of Gardner/Fox, one of the largest design/build companies in the area, located in the upscale Main Line suburb of Bryn Mawr. Gardner/Fox has recently hired back some laid-off employees, but Pennington says that he’s not sure if the uptick in which opportunities became projects is about the company “being in the right place at the right time [or is] truly a shift in the market.” Residential customers are “still looking for what they’ve always looked for”: that would be a family room connected to the kitchen, and a remodeled kitchen or a master suite renovation.
Tulsa, was once the “Oil Capital of the World.” Petroleum still plays a big part in area employment. But as Oklahoma’s second largest city and the 46th largest city in the U.S., Tulsa remade itself as an aviation and aerospace center, with, today, more than 300 aviation-related companies in the area — including Boeing and American Airlines — annually generating $3.3 billion in commercial activity. This is a region with unemployment at a much lower level — 6.4% in September — compared with more than 9% nationally. But at the moment, the largest of those aviation employers — the American Airlines maintenance facility at the Tulsa International Airport, with 7,000 employees — may be looking to sell or relocate, which has given area business owners a case of “lockjaw,” reports Greg Wolter, owner of Community Builders, a home improvement company that expects a record sales year for 2011, due to, among other things, its own aggressive marketing. In nearby Bixby, Okla., Scott Shepperd, owner of S.A. Shepperd, specializing in kitchens and baths, calls Tulsa a “finicky” market for remodeling, where homeowners are more conservative in their spending than they were a few years back. “There seems to be money that wants to be spent,” he says, “but nobody wants to spend it.”
With its strong aerospace industry (employing 82,000 people at roughly 650 companies), and robust information/communications businesses such as Google, Microsoft, and Amazon, Seattle is a white-collar town with a median household income — $60,843 in 2009 — substantially higher than the national average of $50,221 (from the 2010 U.S. Census). Hanley Wood Market Intelligence projects a 4% increase in remodeling activity in the Seattle market, welcomed by local remodelers who have seen the same tepid appetite for renovation experienced in other parts of the country. “It’s nothing like it was five years ago, when you were literally turning down work,” says Joe McKinstry, owner of Joseph McKinstry Construction, a remodeling and custom-home builder in Seattle that had 18 employees during the housing boom and has exactly the same number today, though it is doing jobs that are smaller. In the days of rapidly rising housing prices, the owner of an $800,000 house would spend $600,000 remodeling it. “That’s not the market anymore,” McKinstry says. His company builds lots of kitchens, baths, and decks. Cathy Gaspar, co-owner of Gaspar’s Construction, a Seattle remodeling company, says that her company’s clientele — who used to have few qualms about spending over their budget — now “want to maintain a budget.” Green remodeling has many fans in the Pacific Northwest. One Gaspar’s project two years ago involved reusing or recycling just about everything that could be salvaged.
Home prices in the Gateway City went down during nine of the first 10 months of 2011, due to an abundance of foreclosed properties. But the market for home renovation in St. Louis, a place once known primarily for agricultural products and beer, is slowly looking up. Manufacturing, health care, education, and hospitality — major sources of employment — all added jobs here last year. For the last three or four years, many remodelers here have considered themselves fortunate to have survived, even if they don’t do the kind of sales they once did. “There are a lot of one- or two- or four-man companies that used to have 10 or 15 employees,” says Scott Mosby, owner of Mosby Building Arts, one of the largest remodeling companies in the region. “But the ones that should be around are still around.” Mosby and others expect to see more business just from pent-up demand. Gary Callier, president of Callier & Thompson, which operates a large kitchen and bath showroom in St. Louis, says that his company is “still down 30% from where we were four years ago.” But Callier says he is budgeting for $8.4 million in sales in 2012, which is what the company expected to see in 2011. Like many remodelers, he says, “I’ve thrown away my crystal ball.” This market, with many older homes, also has an older demographic. That’s reflected in the many requests that Callier & Thompson gets for walk-in tubs, low-threshold showers, and higher toilets. Mosby credits his success to the company’s decision to create a “Solutions” division for maintenance and repair, to augment design/build sales. In 2009 and 2010, Solutions generated 60% of sales, but in 2011, design/build once more generated 60% of Mosby Buildings Arts’ sales.