Tortoise & Hare
These cities have made a slow and steady climb in the Top 100 Markets list over the years.
Residential Remodeling Index ( RRI) research places Boston sixth on the list of largest markets based on remodeling activity per household. Remodelers there agree that repeat customers have bolstered their businesses in the last year. With some houses more than 150 years old, little room for new construction, and the seventh most dense population in the country (according to 2010 census data), Boston is a consistently popular remodeling market. The city has claimed the lucky 13th spot on the Top 100 Markets list for the second year in a row, steadied by job security and strength in service, technology, education, and medical industries. “I don’t think we’ve seen the erratic nature the rest of the country has,” says REMODELING columnist Greg Antonioli, president of Out of the Woods Construction, in Arlington, Mass. Antonioli suggests that residents of Boston’s higher-end neighborhoods still remain financially conservative, but that “posterity fatigue” is setting in. “They were ready to pull the trigger on a project in fall of 2008, and they’ve been sitting on it for three years,” he says. “Now they’re tired of waiting and want to move forward, though they are interested in seeing more options and cost breakdowns, which we certainly don’t mind.” Antonioli and Cory Desjardin, who is president at New England Design & Construction, in Boston, both note that real estate turnover has brought them new business over the past year. “We’ve done two projects and are looking at a third where the clients have purchased a property with the intent to remodel it before they move in,” Desjardin says. “Realtor friends have told me that home values haven’t fluctuated too much — they’re not going up, but they’re also not going down. Leads I’ve gotten through Realtors’ offices are for homeowners who are buying now and remodeling right away so that in five years they can turn it around again.” Other Boston homeowners are moving forward with needs-related remodels, such as growing families or in-laws moving in. They’re remodeling rather than selling, and David West, president of Meadowview Construction, in Georgetown, Mass., says that they’re looking to work with someone they can trust. “It used to be that having a large proportion of repeat and referral work wasn’t a great idea — you need to be bringing in new customers as well. But referrals and repeat work have really kept us afloat. Most of these people have busy careers, they work a lot, and they don’t want to have to be in their house to manage a project. They want to work with someone they’ve worked with before, or who comes as a recommendation from a trusted friend.”
ProBuild, a large national building products supplier closed its two Chicago locations at the end of 2011. Steve Taylor, co-owner of Synergy Builders, in West Chicago, says that besides ProBuild, several large millwork companies have closed their doors. In turn, his small millwork supplier has picked up the slack and is doing well. He says that in this tough market, when it comes to remodelers and vendors, those that remain are offering strong customer service and are doing well. “We demand great subcontractors and vendors — it’s all about service,” Taylor says. Synergy Builders recently dropped a large cabinet company because the remodeler was not receiving the type of customer service required to respond to its clients. Taylor says that a representative from his new cabinet company sent a vendor to the jobsite to help him with a design. His plumbing vendor is replacing damaged products without any hassle and recently took some of the Synergy Builders crew on a golf outing. Taylor says that his homeowners want to know that he is bringing reliable companies into their homes. Synergy Builders has an eight-week backlog and has and expects to increase sales in 2012. “Vendors see how well we are doing, and they help us any way they can,” Taylor says. “They want to keep us as customers.”
LaPelusa Home Improvement has been in business in Niles, Ill., for 46 years and is seeing local companies closing their doors, says president Tony LaPelusa. Three large local suppliers have gone out of business, and a Milgard window and door manufacturing facility has closed. However, LaPelusa says, the vendors that he works with are very attentive. If he has an issue, not only does he get a visit from a supplier rep, but sometimes from a manufacturer rep as well. “They are very helpful,” the remodeler says. As far as product orders go, LaPelusa says he hasn’t noticed any issues — in fact, he adds, if anything, order times have gotten shorter. His company rebounded well from a rough 2009 with a good 2010 and 2011, which he describes as “slow, tentative growth,” and he says that help-wanted signs in store windows and full shopping-mall parking lots are both signs that people are spending money. LaPelusa Home Improvement has work lined up through spring 2012 and has several projects currently in different stages from design to bidding that the owner expects will contribute to the company’s 2012 volume.
According to website OregonLive.com, while Oregon’s rural areas continue to struggle with especially high unemployment, metro Portland is now recovering faster than many other U.S. metro economies. Since 2009, metro Portland has added 4% to its gross metropolitan product, compared with the U.S. average of 3%, and employment per capita increased by 2%, versus the national metro average of 1%.
But as in other markets, Portland remodelers have seen fewer and smaller jobs the past few years. For many, work may be steady, but how much available work there is depends on the neighborhood and its proximity to those involved in high-tech industries. (Intel employs thousands of workers and pumps billions of dollars into the state’s economy.) Overall, the housing market remains depressed, and Mitch Speck, owner of Specktacular Home Remodeling, believes it has yet to bottom out. “There are still a lot of foreclosures,” he points out. “As long as those foreclosures continue, we’ll see prices decline.” While Portland remodelers agree that there is a sense of pent-up demand, this housing issue is making it difficult for midrange clients to get financing. But high-end jobs, too, have slowed down. Lane Cooper, owner of Cooper DesignBuilders, in Portland, says that he has had only a few $200,000-to-$700,000 jobs this past year, but that $25,000-to-$50,000 projects are picking up because “people can handle projects of that size without getting financing.” The challenges of the changing market have resulted in changes to remodelers’ business practices. Speck laid off employees, moved his office back to his home, and took on production duties. He also has gone back to doing light commercial work, where he has seen an uptick. Wade Freitag, owner of Craftsman Design and Renovation, moved his office/showroom to the second floor of Rejuvenation Lighting & House Parts, which was recently purchased by Williams-Sonoma. He has found that this increased foot traffic offers his company a built-in qualifier. Despite the ongoing challenges, both Freitag and Speck remain optimistic for 2012.