New York, NY (PRWEB) January 30, 2014
Operators in the Commercial Property Remodeling industry met weak demand over the five years to 2014 as a result of a high office rental vacancy rate and slowed consumer spending after the recession crushed corporate profit. With industry clients downsizing or closing, they were no longer in need of the industry's remodeling services. As a result, industry revenue is estimated to decrease at an annualized rate over the five-year period. With consumers returning to their prerecession spending habits since 2012, revenue is expected to increase in 2014.
With decreasing office rental vacancy, commercial property remodeling is on the rise. More new businesses are opening and many existing businesses are expanding, which is creating a growing need for the industry's commercial building addition, alteration and renovation services. This trend is anticipated to increase the number of industry establishments at an average annual rate in the five years to 2014. The number of establishments has rebounded from the period's largest decline in 2009 during the height of economic instability. Profit has also risen over the past five years, and this is due to increased revenue from emerging businesses and more efficient management of expenses, such as the greater use of subcontractors hired on a per-project basis in place of in-house salaried workers.
According to IBISWorld Industry Analyst Sally Lerman, “The Commercial Property Remodeling industry is highly fragmented.” Contractors primarily operate in regional and local markets, resulting in high regional competition. In general, given that contractors must be physically at the project site to complete remodeling work, it is difficult for companies to operate across the country. Only a very small number of contractors have the capital resources to operate nationally. As such, in 2014, the top four companies (including Belfor Holdings Inc., DKI Holdings LLC and Paul Davis Restoration) are anticipated to account for less than 10.0% of industry revenue, which indicates very low market share concentration.
In the five years to 2019, “the industry is forecast to exhibit more steady growth,” says Lerman. The office rental vacancy rate will decrease and consumer spending and corporate profit will increase as the economy continues to strengthen, providing businesses with more discretionary income for industry services. Additionally, increased interest in environmental sustainability will lead to growth in ecofriendly remodeling, stimulating rising demand for green building renovations and alterations. However, industry operators will need to be conscious of rising interest rates of commercial loans by which many of the industry's projects are financed, adding extra an extra cost to businesses' remodeling budgets. Revenue is expected to increase at an annualized rate over the period.
For more information, visit IBISWorld’s Commercial Property Remodeling in the US industry report page.
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IBISWorld industry Report Key Topics
The Commercial Property Remodeling industry primarily remodels construction for commercial buildings. Remodeling construction includes additions, alterations, reconstruction, maintenance and repair work. This industry is composed of general contractors, operative remodelers, remodeling design-build companies and remodeling project construction management firms. This industry does not include residential remodeling.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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