Commercial outlook: A mixed bag

Home Al’s Column Commercial outlook: A mixed bag

(First of two parts) By Mark Nestler A rising tide may not lift all boats after all. That’s the prevailing wisdom when it comes to the outlook for the U.S. commercial flooring market in 2021.

I believe there are three major drivers that will impact the level of commercial furnishings activity for 2021 and beyond. They are as follows:

  • The pandemic—How it changed behaviors and are the changes permanent or transient?
  • Technology—How will the continuing progress of technology impact work and lifestyle?
  • Demographics—What will the trend of population growth be, along with its makeup, and how will that impact the different commercial segments?

Here’s my view on the drivers that will impact the main commercial flooring segments.

Corporate/workspace. The pandemic has limited the use of offices. As companies discover they are able to manage effectively and productively with fewer people in the office on a regular basis, their evaluation of the amount of office space square footage required to accomplish their business has (and will) change. The magnitude of the change will be impacted by the workplace population growth and technology improvements that enhance the work away from the office experience.

The workplace population’s size prior to the pandemic was already being negatively impacted by lower overall population growth and very low immigration. Due to the pandemic, it appears that many companies have permanently eliminated positions. This may be due to lower expectations for top-line revenue and/or to technology thrust on the company by the pandemic that showed there were tools that lessened the requirements for headcount.

Technology improvements are impossible to know, except that they are sure to continue. These thoughts lead me to believe that overall workspace square footage requirements will shrink. The outlook for 2021 business for the workspace segment would seem to be challenging. While 2020 business was hit by the pandemic, the negative factors were offset to varying degrees by a pipeline of back orders, which have likely been significantly depleted going into 2021. Also, most companies may wish to restore their financial footing before spending on non-essential outlays, such as refurbishing an office. A possible offset may be office reconfigurations to accommodate new workspace protocols; however, that would not seem to be a sufficient offset. Due to the trends outlined, the growth thereafter may be limited and likely take many years to return to pre-pandemic levels. Nonetheless corporate will remain the largest commercial furnishings segment.

Government. The broad government segment is best separated between federal and state/local. The overall pandemic impact would seem to be similar to that on corporate/workspace. On the demographic side, government is an area that seems to always be on an upward trend in terms of number of people on the payroll. Technology will also impact this area, but more than likely it will be a segment that is slower to adopt labor-saving technologies. While state/local governments may wish to increase expenditures to stimulate their economies, many will be constrained by revenue shortfalls due to the pandemic. While 2021 may be constrained, this seems like a growth segment over time.

In the next installment of this two-part series, I will delve into the hospitality, retail, health care and multi-family sectors.

Mark Nestler is president of Nestler Strategies, a firm that provides go-to-market strategies for manufacturers and distributors of commercial interior products.

Must Read

Shaw Industries, Encina announce carpet recycling partnership

The Woodlands, Texas — Encina Development Group, a producer of ISCC+ circular chemicals from end-of-life plastics, has announced a new recycling partnership with Shaw...

What’s new with moldings, accessories, sundries

As flooring professionals know all too well, a job isn’t complete until the proper finishing touches—moldings, accessories, sundries—have been installed. With so much importance...

Pergo Extreme expands product offering

Calhoun, Ga.—Pergo Extreme is continuing to expand its portfolio with 16 new introductions and advancing its existing waterproof warranty by adding WetProtect technology to...

How some flooring dealers make ecommerce work

The idea of ecommerce is still in its infancy within the world of flooring. While the concept has found success within some home improvement-related...

CFI, NWFA recognize FCEF training program

Dalton—The Certified Flooring Installer (CFI) program and the National Wood Flooring Association (NWFA) will offer credit toward their certifications for students completing the Floor...

CARE to increase carpet differential assessment

Dalton—CalRecycle directed the California Carpet Stewardship Program (CARE) to increase the carpet differential assessment effective April 1, 2023. The increase is necessary, according to...

As seen in

Feb. 15/22, 2021

Some text some message..