Revived construction activity and incomes will facilitate demand for yard services
Los Angeles, CA (PRWEB) April 07, 2012
The Landscaping Services industry has had a difficult few years coping with the slump in demand from residential, commercial and institutional clients due to the economic downturn. During the past five years, the prolonged and substantial decline in construction activity, combined with the drop in consumer spending, reduced the pool of customers for the industry. IBISWorld expects industry revenue to decline at an average annual rate of 1.7% to $61.4 billion in the five years to 2012. The total collapse of the housing market led to falling property values, foreclosures and more stringent standards for homebuyers seeking financing. As a result, fewer homes with yards and patios needed landscaping and yard maintenance. According to IBISWorld industry analyst Andrea Alegria, “during the recession, financially strapped homeowners cut back on spending by performing yard maintenance themselves instead of contracting industry services.“ Others cancelled or postponed plans to upgrade or remodel their patios and yards.
Similarly, the down economy slammed the breaks on construction of new resorts, retail centers and corporate campuses that required landscaping. Low consumer spending led to branch closures, layoffs and bankruptcies, while property owners at existing shopping centers, office developments and other commercial spaces faced high vacancies, which reduced revenue for landscaping services. According to Alegria, “municipalities and institutional clients like schools and hospitals were less affected by the recession, but weakened demand led to intense competition.” This trend forced firms to lower prices for bids on larger projects. Further, because of depleted tax revenue, some municipalities limited spending on landscaping services at parks and other public spaces. Intensified price competition forced firms to offer discounts.
Nonetheless, the industry is bouncing back as the economic recovery gains momentum and construction activity picks up. Over 2012, industry revenue is expected to grow 4.2%, largely driven by an increase in per capita disposable income and a 30.6% increase in housing starts. Revenue will likely continue to grow over the five years to 2017, though much of this growth will be driven by small operators and non-employers.
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This industry provides landscape care and maintenance services, including installing trees, shrubs, plants, lawns or gardens. Some landscape companies also design landscape plans or construct walkways, retaining walls, decks, fences, ponds and similar structures.
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