ProBuild withdrawing from some Eastern markets
ProBuild Holdings, the nation’s largest pro dealer, has decided to close down some of its newly built facilities in the Pittsburgh area, as well as operations in Hagerstown, Md.
An HCN confirmation of an internal memo by ProBuild CEO Rob Marchbank last week showed that the Denver-based pro dealer has revisited its decision to operate three brand new LBM facilities in the Pittsburgh region.
An attempt to reach ProBuild for comment or explanation received no response.
In January 2012, ProBuild opened a new location in Altoona, Pa., approximately 100 miles east of Pittsburgh. The 65,000-sq.-ft. Altoona facility included a kitchen, bath and millwork showroom, as well as a full assortment of building materials. ProBuild Altoona also offered installation services.
Last year, ProBuild opened two other locations near Pittsburgh, which is the home turf of rival pro dealer 84 Lumber: White Oak, Pa., and Morgantown, W.Va.
ProBuild will close operations in Pittsburgh, affecting the Altoona and White Oak, Pa., locations, as well as Morgantown, W.Va., and Hagerstown, Md.; in last week’s announcement, Marchbank said the Winchester, Va., and Frederick, Md., locations will handle the redirected Hagerstown business.
"The strategy of opening a greenfield location in a competitive market with challenging economic conditions is not an effective approach to market growth," Marchbank wrote in the memo.
EPA delays lead paint rule for commercial buildings
The Environmental Protection Agency (EPA) has delayed its plans to expand the Lead: Renovation, Repair and Painting Rule to commercial buildings until 2015, the National Association of Home Builders (NAHB) reported. The existing rule that governs any single-family housing continues to apply, including multi-family residential units that are part of mixed-use construction, or any commercial space where a child under the age of six resides or “regularly” visits, such as day care centers.
The EPA had entered into a voluntary — and controversial — legal settlement with environmental groups that will significantly expand the residential lead paint rule to commercial buildings. The final element of the legal settlement required EPA to accelerate the development of the commercial buildings rule, and the agency agreed to introduce one by September 2012.
However, as NAHB and other trade groups repeatedly pointed out to EPA and members of Congress charged with EPA oversight, the agency failed to perform prerequisite studies on the potential lead dust exposures to adults — not children — during renovation activities in pre-1978 commercial buildings.
Under federal law, the EPA is required to perform these studies prior to proposing a commercial building rule. To date, the EPA has not conducted the required study.
Because lead-based paint can still be used in commercial and industrial buildings, the commercial rule would apply to every commercial building in the country regardless of when built.
In addition, EPA has yet to approve a test kit for the presence of lead-based paint that meets the accuracy standard it said it would require when the residential rule was implemented in 2010.
The residential rule has created a competitive disadvantage for professional remodelers bidding against fly-by-night contractors, and lack of consumer awareness only fuels this disparity. Many professional remodelers are being outbid because their prices include compliance with the rule while their competitors do not.
NAHB continues to voice its concerns that this same inequity may transfer to the commercial market. The EPA’s three-year delay in developing the lead paint rule for commercial buildings is in part a recognition by the agency that it has not conducted the required analysis to move forward in the near term, the NAHB states.
At construction conference: recovery
The title of the conference was “The Recovery Has Started,” and the title will tell you a lot about the tone of the 2012 Building and Infrastructure Conference presented by merger-and-acquisition specialists Lincoln International and L.E.K. Consulting.
Keynote speaker John Burns, CEO of John Burns Real Estate Consulting, described himself as bullish on housing and construction industries. He pointed to 20% gains in total permits and single-family housing starts. He alluded to the power of pent up demand. And even though the rate of delinquent mortgages is running at about 11.9%, that figure seems more manageable when one considers that it’s only 6.2 percentage points higher than any normal year, he said.
Add to that analysis a forecast for distressed sales as a percentage of all home sales to begin declining after 2012, then you have a bullish outlook.
Lending his voice to the chorus of recovery was L.T. Gibson, president and CEO of US LBM Holdings, which operates in eight Northeast and Midwest states. “In our markets, we saw quite a bit of improved activity this year,” he said, in a panel discussion about the near term M&A outlook. “More importantly, what we’re seeing going into the fall and spring with our order patterns is cause for continued optimism.”
With single-family starts heading toward a 500,000 plus in 2012, Gibson is looking for another 15% to 20% increase in single-family starts in 2013.
U.S. LBM Holdings was created in late 2009 and has since acquired eight LBM dealers, allowing each to maintain its locally known brand name. Gibson said the company continues to look for new acquisitions.