Contract: State of the industry—Innovation sparks broader usage of hard, soft surfaces

June 09, 2017

June 5/12, 2017: Volume 31, Issue 26

By K.J. Quinn

 

Screen Shot 2017-06-09 at 10.36.25 AMThe dynamics in the top commercial sectors are changing as interior design preferences evolve. While luxury vinyl tile (LVT) and modular carpet are the two fastest growing products, experts say, alternative flooring products are meeting designer needs for good looks, sustainability, durability and low maintenance and are expanding usage across the board.

“Categorically, the commercial carpet market is no longer defined by broadloom vs. carpet tile,” said Mike Gallman, senior vice president, commercial product, Mohawk Group. “It’s now hard surfaces vs. soft surfaces.”

Anecdotally speaking, experts say commercial flooring sales are on pace to increase 3% this year, according to industry estimates. While projections are based on a small sample size— approximately four months at press time—the growth rate represents a slight improvement over Q4 last year when market sales were reportedly soft. What is increasing more dramatically are flooring choices, as new products, aesthetics and finishes provide more selections than ever for the A&D community.

“Choices of sizes, colors, patterns, bevel treatments, constructions, wear layers, etc., affords them the ability to do what they do best—create,” said Al Boulogne, Mannington’s vice president of commercial resilient business. “Offering the broadest portfolio of choices gives them the ability to design a space without limitation of options.”

While experts say sales are fairly even between carpet tile and broadloom—the latter of which maintains a slight edge in volume—modular products are expanding significantly faster. “Carpet tile has been steadily taking share from broadloom in the education and corporate/office sectors, preferred for its ease of installation, increased design options and flexibility for moving and replacing tiles once installed,” stated Matt Miller, president, Interface Americas.

Sharing the spotlight is LVT, which is helping hard surfaces sustain growth in retail and healthcare strongholds and expanding at a double-digit rate into non-traditional markets like corporate/offices and hospitality. Expansion is coming at the expense of carpet and low-cost options such as VCT as lifecycle costs and styling further impact purchasing decisions. Workhorse products such as rubber, linoleum and VCT remain fixtures in healthcare and education settings while hardwood and laminates are carving a niche in certain retail and hospitality spaces.

Screen Shot 2017-06-09 at 10.36.37 AM“In all cases, performance and value are the drivers,” said Denis Darragh, Forbo’s vice president, North America, citing linoleum as an example. “Performance encompasses all aspects of the product, from durability through being the best product for a healthy indoor environment.”

Ceramic tile in particular has grown steadily. Estimates show the category represents about 15% to 20% of commercial sales and volume, with specified contract accounting for about 70% of the business. Ceramic is on pace to reach or exceed 2016 growth rates, when volume and sales rose approximately 6% and 5.5%, respectively.

“There still remains a tremendous growth opportunity for the tile category,” said Gianni Mattioli, executive vice president, product marketing, Dal-Tile. “Our company is diligently working to take advantage of this opportunity and the tile industry as a whole also appears to understand this reality.”

Mitigating factors
Despite the fact key economic indicators such as inflation, consumer confidence, lending rates and new construction are pointing in the right direction, growth—or lack thereof—within the five major markets varies. Each segment faces specific issues impacting interior design and flooring selections. For example, the corporate/office sector is witnessing changes in interior design aimed at helping employers retain and recruit top talent and ultimately drive greater results.

“Driven by strong earnings, many corporations are reinvesting in their offices through renovation or relocation,” noted Mark Oliver, vice president, workplace and retail segments, Mohawk. “They recognize the office—and the way its employees engage with it—is changing faster than ever before.”

The workplace remains a bedrock market for carpet tile, where it is coveted for acoustical properties, durability and comfort underfoot. “We’re still seeing carpet tile increase in the corporate part of the commercial market,” observed Ralph Grogan, president and CEO, Bentley Mills. “There are a lot of law offices and accounting firms using carpet tile now as they are going to a more open office concept.”

Screen Shot 2017-06-09 at 10.36.50 AMMeanwhile, hard surfaces such as resilient, hardwood, porcelain tile and even polished concrete are quickly gaining coverage in lobbies, break rooms and bathrooms. “Corporate is one of the last segments to be looking at hard surfaces in a bigger way,” Mannington’s Boulogne pointed out. “We are starting to see a shift in preference to LVT as design has started to focus more on targeting this category.”

Hard surfaces remains dominant in healthcare as resilient, rubber and linoleum meet durability, maintenance, hygienic and slip resistance needs, observers say. Ceramic, porcelain and terrazzo tile are commonly found in public areas such as hallways, making it easier to maneuver rolling equipment and mobile aids. Carpet and LVT are primarily specified for non-patient areas like waiting rooms and medical offices.

“Architects and designers are putting LVT in healthcare applications because of its modularity,” said Jeremy Salomon, director of product management and marketing – retail, Tarkett. “We’ve been designing LVT to look like some of the sheet vinyl products. It gives designers flexibility in solutions they want to put into healthcare applications.”

A fast growing area within healthcare is assisted living, due largely to the shortage of rooms available to care for an aging U.S. population. Facility managers are reportedly sprucing up these spaces to create “homey” environments for residents. “Activity is trending up, with some larger, continuing care retirement communities going up—along with new senior-living projects in urban areas, drawn by Baby Boomers in search of a more active retirement lifestyle,” said Jamey Block, vice president, resilient product management, Armstrong.

A similar makeover is occurring in hospitality, as hotels attempt to incorporate residential design with high-performance products that are also easy to maintain. “Our hospitality business has grown at a 33% compound annual rate over the past three years in the Americas region, and we expect that trend to continue,” Interface’s Miller said. More and more hospitality end users are shifting to a mixture of soft and hard surfaces, providing us the opportunity to sell both our LVT and carpet tile offerings.”

Sector-specific solutions
Other flooring materials, such as broadloom and ceramic, are also reaping the benefits. “For example, a design firm specified wood-look tile for the floors of guest rooms at a boutique hotel in Texas, but also specified carpet to be installed under the beds,” noted Lindsey Waldrep, vice president, marketing, Crossville. “Guests get the comfort of carpet right by the bed, yet the rest of the room is covered in easy-to-clean, rarely-needs-replacing tile that will let hotel staff turn rooms much more quickly and in a cleaner fashion.”

Similar to hospitality, the influx of new construction work and remodeling are impacting the retail segment. The sector is a mixed bag, with end uses ranging from small, mom-and-pop grocery stores to larger restaurants, retail chains and other establishments. “Car dealerships and fitness centers, both considered retail spaces at Dal-Tile, as well as quick-service restaurants, are areas of growth that are positively impacting the tile market,” Dal-Tile’s Mattioli said.

Screen Shot 2017-06-09 at 10.36.45 AMRetail is usually at the forefront of design trends as end users are always on the lookout for trendy, attractive options. “A new and different approach to hard surface designs wins in this highly competitive segment,” Mannington’s Boulogne said. “Abstract visuals are gaining share as are new and different looks.”

At the same time, the high amounts of foot traffic at retail locations require floors that perform well and look good over the long term. Ceramic, wood and carpet are often specified in high end spaces while resilient, VCT and rubber flooring are found in other public areas. “LVT is taking market share from both tile and broadloom sales because of design trends and ease of maintenance,” Mohawk’s Gallman observed.

Meanwhile, in the education segment, LVT is the rising star. Resilient accounts for an estimated half of the flooring specified in this sector, industry research shows. But other products, such as linoleum and rubber, retain a small niche as they provide both visual and functional qualities that appeal to staff, students and parents. “We are constantly improving the visuals as well as the depth and breadth of the product offering, particularly modular options, that enhance the capabilities of the product line,” Forbo’s Darragh said.

Ongoing innovations
Manufacturers of commercial flooring products are continually making investments to meet the varying needs of commercial customers. Designers are creating people-centric spaces for clients which, in part, helps enhance the work-life balance. “That’s why we’re seeing residential and hospitality influences in workplace design,” said Mark Page, senior director creative design and development, Mohawk. “With flooring, designers aim to strike a balance between hard and soft surfaces for work, rest and social activity.”

Soft surface innovation is taking place mostly in design, with new tufting technologies allowing for complex patterns and textures in carpet tile previously only available in broadloom. “It allows the use of more color, patterning capabilities and pinpoint accuracy,” Bentley’s Grogan said. “It has allowed all manufacturers to get lower face weights, which helps with budgets.”

LVT’s good looks have helped propel it to the forefront in many commercial segments. “In addition, the ongoing preference for designing commercial spaces to look more residential in nature has brought popular, proven hard surface products into the commercial arena,” Armstrong’s Block said.

With respect to tile, advances in digital printing technologies have enabled vendors to create realistic 3D visuals that mimic natural materials. “The bar is raised like never before,” Crossville’s Waldrep said. “Convincing wood looks, unique decorative facings, textures, more modular sizes, even porcelain tile panels so versatile they can be installed in ways traditional tile never could.”

Many tile production facilities feature printers that can digitally apply different gloss levels of glaze, metallic and even texture. “When coupled with sophisticated 3D scanners, this means highlights and shadows can actually be printed in line with the physical structure of the tile’s face to enhance the look of even subtly textured surfaces,” noted Ryan Fasan, technical consultant, Tile of Spain. Technology advances are also expanding tile formats, allowing vendors to create everything from beautiful mosaics in hexagon and rectangular shapes to massive porcelain slab sizes.

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