Flooring Contractors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 16,400 flooring contractors in the US install resilient floor tile, carpeting, linoleum, and hardwood flooring. Single-family homes and office buildings account for the majority of sales. Other sources of revenue include apartment buildings; health care and institutional buildings; retail establishments; and educational buildings.

Dependence on General Contractors

Flooring contractors often work with general contractors (GC), which act as a gateway to construction jobs, especially large projects.

Vulnerability to Trends in the Construction Market

The flooring industry and demand for installation services are vulnerable to trends in the construction market, which is cyclical and influenced by economic factors.

Industry size & Structure

The average flooring contractor operates out of a single location, employs about 4-5 workers, and generates $1 million annually.

    • The flooring contracting industry consists of about 16,400 establishments that employ about 78,400 workers and generate $18 billion annually.
    • Most firms are small, independent businesses that served a limited geographical area. The largest firms, such as Redi Carpet, Bonitz Flooring Group, and Spectra Contract Flooring, operate regionally.
    • Large flooring retailers include LL Flooring, Empire Today, and Floor & Décor. Retailers typically refer customers to third-party flooring installers.
                                  Industry Forecast
                                  Flooring Contractors Industry Growth

                                  Coronavirus Update

                                  Jan 3, 2022 - Pandemic Drives Bathroom Remodeling
                                  • The bathroom has taken on more significance for many people who spent a lot of time home during the pandemic, and flooring contractors are likely to benefit as a result. Two in five homeowners report using their renovated bathroom for rest and relaxation, with a focus on cleanliness, a lack of clutter, dimmable lighting, and greenery, according to the 2021 US Houzz Bathroom Trends Study. Design trends are being influenced by hotel experiences, according to the National Kitchen & Bath Association Design Trends 2022 study. Common hotel-influenced choices include heated floors, oversize showers, and separate sinks and vanities. The study found that millennials are looking for larger showers and storage/dressing areas, energy and water efficiency, connected products for water temperature, and entertainment and communication.
                                  • The coronavirus pandemic is boosting demand for warehouse space, and flooring contractors may benefit from the construction boom. The US may need an additional 1 billion square feet of new industrial space by 2025 to keep up with demand, according to commercial real estate services company JLL. "The industry is effectively sold out through the next year," Chris Caton, managing director of global strategy and analytics at Prologis, said in late 2021. Demand is driven by retailers beefing up e-commerce operations amid the online shopping boom, and investing in faster delivery thanks to consumer expectations. Retailers are also securing more storage space in the US to mitigate the impact of future supply chain shocks like those caused by the coronavirus pandemic.
                                  • The CARES Act provided funding for the first round of Elementary and Secondary School Emergency Relief (ESSER), and flooring contractors are benefiting as construction, repair, and maintenance projects start. Typical projects include replacement of doors and windows, replacement of carpet with vinyl flooring, and replacements or upgrades of HVAC systems or HV air filtration systems. The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 generated more funding through ESSER-II funds, and the American Rescue Plan opened more opportunities for ESSER-III funds for schools.
                                  • An expected pandemic-driven increase in conversions of office buildings to residential housing that would benefit flooring contractors hasn't happened. Industry experts say that developers, property owners, and city officials don't think conversions make financial sense in the long run. "There's definitely an incentive for cities to continue to promote vibrant central business districts that are centered around employment," said Manan Shah, an architect in Oakland, CA, with Gensler, a firm that has worked on and studied such conversions for years. "We would need to see a long-term trend and vacancy was high for a number of years for somebody to take the time to go through the conversion process." High office vacancy rates are plaguing cities nationwide, but it's still far less expensive to build housing from scratch than to convert old offices.
                                  • The number of building permits issued for privately-owned housing units increased 3.6% month over month and 0.9% year over year in November 2021. Housing starts increased 11.8% month over month and 8.3% year over year in November. Housing completions increased 4.1% month over month and 3.1% year over year in November.
                                  • Growth in improvement and repair expenditures to owner-occupied homes is expected to remain solid throughout the year and into 2022, according to the Leading Indicator of Remodeling Activity (LIRA) from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The LIRA projects a healthy pace of mid-single digit gains in annual home renovation and repair spending this year, with 4.8% growth by the first quarter of next year.
                                  • Industrial facility construction completions will increase 29% year over year in 2021, according to commercial real estate services and investment firm CBRE Group. Big boxes in the 500,000-square-foot range will account for the majority of new product. Demand growth that began in 2020 will continue in intermodal hubs like the Inland Empire, Dallas, Houston, Chicago, and Atlanta markets. Demand for local infill space will also continue, spurred by the likes of Amazon, Walmart, Target, Best Buy and Costco.
                                  • Total construction spending was unchanged in value month over month on an adjusted basis but increased 8.3% in value year over year on an unadjusted basis in October, according to the US Census Bureau. Residential construction spending decreased 0.5% month over month but increased 16.4% year over year in October. Nonresidential construction spending increased 0.9% month over month and 1.6% year over year in October.
                                  • Employment in the specialty trade contracting industry increased 2% year over year in November but was down 0.5% compared to November 2019.
                                  • The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, decreased to 122.4 in November from 125.2 in October, according to the National Association of Realtors (NAR). An index of 100 is equal to the level of contract activity in 2001. "There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices," said Lawrence Yun, NAR's chief economist. "While I expect neither a price reduction, nor another year of record-pace price gains, the market will see more inventory in 2022 and that will help some consumers with affordability." Yun notes that housing demand continues to be high, explaining that homes placed on the market for sale go from "listed status" to "under contract" in approximately 18 days. "Buyer competition alone is unrelenting, but home seekers have also had to contend with the negative impacts of supply chain disruptions and labor shortages this year," he said. "These aspects, along with the exorbitant prices and a lack of available homes, have created a much tougher buying season."
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