AmeliaIsland, Fla.—Many of North America’s largest and most influential commercial floor covering contractors assembled here earlier this month for the 2024 Starnet spring conference. In keeping with tradition, the event offered attendees valuable educational opportunities while providing a forum for members to network and share best practices.
“For me, the best part of these meetings is the opportunity to interact with the members who make this the great organization that it is,” said Randy Rubenstein, president of Seattle, Wash.-based Rubenstein’s Contract Carpets. “We are fortunate to have so many quality individuals who comprise this group that it is difficult to soak up all of the great focus that they bring to the group. In the course of our businesses, we may feel like we’re out on an island, but when we have a chance to get together like this, we realize that no one is on an island. We all have common challenges, and the sharing of ideas and outcomes at a gathering like this is so helpful to all of us when we return home to our individual businesses.”
Grant Petruzzelli, vice president of DCO Commercial Floors, Atlanta, concurred. “Starnet’s annual meeting is a highlight for me each year,” he said. “The opportunity to catch up with industry friends, get a pulse on the market and share opportunities and challenges with others is unique unto itself. The entrepreneurial spirit of Starnet’s members is palpable, and I leave feeling inspired.”
In that same vein, Starnet board member David Meberg president and CEO of Consolidated Flooring, with offices in New York and Chicago, cited the benefits of collaborating with industry peers, comparing notes and renewing old friendships and acquaintances. “Starnet week is great,” he said. “It really makes it something we look forward to every year.”
All those sentiments dovetail nicely with the theme of this year’s spring conference, “Charting Your Course,” which alludes to both the host city as well as the current state of the commercial flooring sector. As Mark Bischoff, Starnet president and CEO, explained: “Amelia Island is associated with pirate island mysteries, hidden treasures and Blackbeard, so we thought we could do something related to that theme and tie it all back to the programs. The message is if the business starts to get soft, there has to be a path through it—much like finding a path through a storm.”
To that end, Starnet management structured the conference programming to reflect relevant topics such as embracing technology, improving sales organization and business management initiatives to help members scale their businesses accordingly and boost their bottom-line profits. “It’s all designed to help members identify their path for the future so they can determine where they’re going to place the focus on their business,” Bischoff told FCNews.
Indeed, despite the stature and success of the 171-member cooperative—which accounts for more than 420 locations generating upwards of $4.2 billion in sales last year—it’s more important than ever to prepare for both current and unforeseen challenges in order to seize opportunities when they present themselves. For instance, while the hurdles related to the corporate office sector are well documented—a situation further exacerbated by office bank loans that are now coming due—backlogs in sectors that are doing well are mounting. Managing all these obstacles requires a high degree of planning and flexibility, experts say.
“Many of our members report the backlog of projects for 2024 is really good, and some of them are comfortable with the backlogs for 2025,” Bischoff stated. “Over the past few years, everybody had been going full blast. Now it’s starting to get regional again.”
Business is also coming from different areas, Bischoff reported. That applies to both product categories and unconventional end-use markets. Take polished concrete, for example. “These are not areas where members normally would’ve played, but now they are because they have the capability of working with those materials and processes. Some are doing concrete restoration or full pours; some are doing epoxy coatings. Our terrazzo guys are doing different things and starting to expand the scope of work in the same client base that they’re strong in—minus the corporate market, of course. Members agree there’s really not a lot going on there.”
End-use market activity mixed
Bischoff’s observation that commercial flooring activity has evolved to reflect micro-economic issues seen at the local level is largely corroborated by contractors located in different parts of the country. Take Consolidated Flooring’s experience, for example. “Markets up are education, healthcare and public spaces,” Meberg said. “The corporate market is down, but we are seeing signs of life.”
In the Pacific Northwest, it’s pretty much the same—although in different degrees. “Our strengths right now are in the Native American casino and resort sector, hotels, health care, education (both K-12 and higher ed) and airports,” Rubenstein told FCNews. “The tenant improvement sector has all but disappeared, but the owner-occupied business construction is still a factor for us.”
At Columbia, Md.-based CB Flooring, business got off to a good start at the beginning of the year, according to Chuck Bode, chairman of the board. “Healthcare and the bio-sciences are doing really well, along with government funded work. Having said that, ‘new stick built’ multi-family apartment work is basically dead in the water in our market, and commercial office tenant fit-outs is also under some pressure.”
For DCO Commercial, business prospects are very targeted. “While there are opportunities to grow in nearly every segment right now, there is a cautious approach by general contractors to buy out projects,” Petruzzelli explained. “Contracts were bought out far earlier in the project’s lifecycle a year or two ago. Much of this was a hedge against supply chain disruptions. Today, we are touching the same project many more times in preconstruction to help our customers establish a clear intent for their design and the scope of work we’ll perform.”
Then there are segments like multifamily. While it’s a sector that’s residential in nature, most multifamily projects entail specified products based on bids. That puts it in the crosshairs of many commercial contractors.
“This is where we have seen an evolution in our membership,” Bischoff stated. “They used to not get involved in multifamily, but the volume is so big. They have so many connections with developers, end users and general contractors who say, ‘We want you to do this work for us—we trust you. We know you don’t do it, but we want you to do it.’ And over the last couple of years, because of just the sheer volume, our members have been pulled into it by their customers.”
Mid-term forecast
By most accounts, commercial construction will be challenged for the remainder of 2024 and into the new year. That sentiment was corroborated by ITR Economics’ Taylor St. Germain, who closed out the Starnet conference with a comprehensive presentation covering a host of timely topics ranging from GDP trends and labor market challenges to inflation and the global economy as a whole.
“Commercial construction will slow down in 2024,” Germain told attendees. “Don’t expect the growth that you’ve experienced over the past few years to continue.”
By and large, though, commercial flooring contractors remain optimistic. “Overall, 2024 has been strong and will continue to be throughout the year,” DCO Commercial’s Petruzzelli said. “Our backlog was healthy and our team remains upbeat and about our pipeline.”
For other commercial flooring contractors, it’s the work already in the pipeline that will fuel activity throughout the remainder of the year. “While we don’t expect things to pick up until after the election, we believe there will be a lot of pent-up demand that will be coming onto the market, so we are cautiously optimistic for the near future,” Rubenstein said.
Consolidated Flooring’s Meberg is also cautiously optimistic about business. “In New York everyone says, ‘Survive ‘til 25.’ We are looking forward to 2025, but the activity has generally been up with our bid volume, up 30% year over year. All this bodes well for the second half.”
