Analyst sees bright skies for apartment builders
Rents are rising, occupancy rates are high, and the apartment business is about to explode — all of which spells good news for the multi-family construction business, according to an analyst for John Burns Real Estate Consulting. In her Housing Dimensions blog, VP Lesley Deutch cited pent-up demand from young adults, modest job recovery and government policy as the three top factors pushing this trend.
Calculations done by John Burns, an independent housing research, advice and consulting firm, have estimated 3.4 million units of unmet household demand. “The largest segment of this demand is young adults, who have either moved back in with their parents or taken on roommates,” Deutch wrote. “We expect this demand to materialize over the next few years, with most of the demand entering the apartment market because of the inability to qualify for a home and uncertainty over their employment situation.”
The firm believes that job growth will approach 2% by 2012, not enough security for many people considering taking on a mortgage.
As for rent increases, the forecast is for an average 4.5% growth per year through 2015, based on a range of MSAs. And although development money is flowing steadily into apartment construction, renters will eventually hit a ceiling when they realize it is cheaper to own than rent, Deutch warned.
But in the short term, the most influential factor may be the backseat role of government in promoting housing in the years to come. “[We believe] 19 years of continually more aggressive government intervention toward homeownership is about to reverse itself,” Deutch wrote.
Zeeland Lumber rebrands itself
Back in 2006, Zeeland Lumber in Zeeland, Mich., was named Home Channel News Independent ProDealer of the Year. The building industry has changed dramatically since then, and Zeeland has changed with the times.
The company unveiled its new branding last month, including a new logo and a simple, two-word tagline: “Build. Trust.”
“It’s such a fitting tagline,” said Mark VandenBosch, VP sales and marketing. “Each word can stand alone, and together they represent everything we do.”
The new logo also reflects what Zeeland can do. The six-sided shape represents its diversification in six business units — lumber, holdings, concept showroom, contractor services, truss and components, and logistics and distribution.
“What we have been working on is staying relevant for our customers,” said VandenBosch.
In the company’s new brochure describing a "Brand New Zeeland Lumber," the company’s mission is spelled out as: "Building trust in our industry through knowledgeable service, innovative solutions and exceptional value."
The material describes the change in the brand’s look and focus this way: "While we remain firmly grounded in the values that founded this company, we recognize that we have grown and will continue to grow to meet the building needs of our community and the region. It is our expressed hope that the new identity captures this spirit while remaining faithful to our roots.
From the trenches: Who cares about a peanut vendor?
Not many people know about Amedeo Obici’s business history. But if they did, they could definitely learn from it.
Born in Oderzo, Italy. Migrated to America in 1889. His voyage was intended to take him to live with his uncle and his family in Scranton, Pa. But unable to speak any English, he was misdirected, or lost his way, and ultimately ended up in Wilkes-Barre, Pa., where other Italians, the Musantes, took him in.
While working at the family’s fruit store, Obici observed an early marketing strategy of Mr. Musante. His store fanned the fragrance of roasting peanuts out into the street, where people would be lured inside to buy the peanuts.
Obici eventually acquired his own peanut cart and became a great promoter in his own right. He befriended Mario Peruzzi, a fellow immigrant working for a wholesale grocer. The two went into business together in 1897, and Obici eventually developed a method of blanching, roasting and shelling peanuts.
It worked. And in 1906 Obici and Peruzzi founded the Planters Peanut Co.
During the Depression, companies struggled. Many looked for ways to cut costs and increase profits, putting the product quality at risk. Obici, however, concentrated on making the highest-quality product while developing more economical production methods. He was successful, and competitors fell by the wayside.
I tell this story because, in much the same way, I believe too many builders today take too many shortcuts, resulting in significantly inferior products. I see some businesses closing early, shutting their doors while they make deliveries, and cutting back on the number of days they will make deliveries. In making difficult decisions on how to manage costs, too often we seek solutions that ultimately cheapen our products.
Many vendors are reducing and, in some cases, eliminating sales and marketing support, and cutting co-op dollars way back, resulting in decreased support and customer service. The way companies handle returns, complaints and call-backs have all deteriorated, making long-term success less viable.
Now here’s the good news for builders, lumberyards, vendors and manufacturers. Companies that have invested in their future are in a prime position to compete and win against companies that have not. If you follow the crowd into cutting costs to the absolute minimum, then you position yourself to be a laggard in your industry. By contrast, those who work hard, innovate, maintain — as much as possible — sales and marketing, and keep a higher level of customer service and support are on the path to be the leaders in the future.
The best time to capture market share is when the competition is doing a poor job of serving its business/customers. The lowest cost you will ever pay to attract and retain customers is when everyone else is doing a poor job. This market is ripe to recover; where are you positioning yourself?
St. Paul, Minn.-based Lampert Yards has 32 locations and more than 100 years of history.