Robert Ross, a commercial builder from Austin, Texas, calls the Commercial Builders Council “the best kept secret at the NAHB.” But the secret was out on Feb. 13, when more than 150 builders showed up for the council’s yearly seminar entitled “Light Commercial Construction for Home Builders.”
Ross and two of his colleagues, also commercial builders, freely shared their expertise in constructing restaurants, medical facilities, strip malls and schools at the International Builders’ Show session. Ed Feiler, a Savannah, Ga., builder of shopping centers, suggested starting small, with a 10,000-square-foot office building. “Find someone in your area you can partner up with,” he advised.
Fred Dallenbach, a Louisville, Ky., builder of mini warehouses and multi-family projects, urged attendees to look at traffic counts and the number of fast food restaurants when researching development projects. “You can expect to get a better return long term,” he said. “There’s basically no top to commercial.”
That’s exactly what the audience wanted to hear, now that the bottom’s fallen out of the residential market. Commercial construction held up well last year, with spending on non-residential construction rising 15 percent during the first 10 months of 2007 compared to the previous year, according to the U.S. Commerce Department. McGraw-Hill Construction is predicting a slowdown in commercial construction for 2008, but a 6 percent decrease doesn’t look so bad to builders in today’s residential sector.
Lumberyards can also live with that decline, and many have already shifted their focus to commercial work by redeploying sales and marketing resources or making acquisitions. Pro Build Holdings, which exhibited at IBS this year, purchased Rosen Building Supplies, a commercial building supplier in south Florida and Las Vegas, in late 2007. Early last year, the Denver-based company acquired Polar Supply, a commercial building material supplier in Alaska, where its Spenard Builders Supply division has always been strong in government and industrial projects.
And don’t forget about drywall, said CEO Paul Hylbert. “Our emphasis on gypsum expansion, both internal and external [acquisitions], serves to increase our commercial business mix,” he noted.
Stock Building Supply, which shared a booth at IBS with Fergus on Enterprises under the Wolseley banner, has been shifting its customer base through several acquisitions in the commercial hardware and door installation business.
A number of IBS exhibitors are also making forays into the light commercial market, either through new ventures or by expanding their existing product lines.
Black & Decker’s new commercial hardware division, called K2, displayed a line of locksets, auxiliary dead bolts, exit devices and door closers. Part of Black & Decker’s hardware and home improvement group, K2 has only been in existence for six months.
Hurd Windows and Doors has set up a new commercial division to grow its market share. Its new Monument series of commercial entry doors and single hung windows is ADA compliant, making it suitable for hotels and restaurants. Andy Wilkers on, corporate training manager for Hurd, said the company is no longer dabbling in commercial sales. “We only want to sell to commercial distributors and existing customers who understand the market,” he said, listing dedicated sales and service staff among the criteria.
Steel framing provides another opportunity for building material dealers and suppliers. Simpson Strong-Tie is developing an anchor tiedown that can be used to connect wood to steel or concrete. Tim Ellis, product manager for Simpson’s Anchor Tiedown Systems, said the company is working on cold form steel connectors in response to the uptick in multi-story construction. “We’re expanding that catalog quite a bit this year,” he said.
Dow Building Solutions, which released a new sheathing/insulation/water barrier product at the show for wood structures, is also developing an insulated wall system for the commercial market. “It’s a game changer,” said John Hammer, a Dow marketing manager. Designed for steel studs, the product will be released later this year under the Thermax brand.
A new product release from Ainsworth, a concrete forming panel made from oriented strand board, is suitable for low-rise commercial structures, bridges and industrial applications. Because it’s FSC-certified, “Pourform-OS” qualifies for LEED points, an added value to many architects and commercial builders.
Over at Georgia-Pacific, product development manager Barry Reid noted that many LBM dealers are starting to stock GP’s commercial grade gypsum. “They’ll do whatever they have to do to supply their [builder] customers,” Reid said. By the same to ken, suppliers are trying to keep up with changes at the dealer level. “We’re doing what we can to support our customers by providing the services they’ll need,” said Nate Jorgensen of Weyerh aeuser. His commercial team tries to help dealers with bids and take-offs, which can be more challenging than residential work. “Multi-family and commercial is quite a competitive space,” he said.
Ed Feiler, the commercial builder who helped lead the NAHB seminar, issued a similar warning. Fire ratings, bonding and insurance requirements, and sealed bids—expect to make mistakes, he said. But approximately one-third of the NAHB’s members are involved in commercial construction, which may provide more opportunities than residential housing construction.