How Residential Booms Are Changing the Construction Game
Plaza Construction is a construction management firm based out of New York City that has spent recent years focusing on commercial construction projects. Now, they are relaunching their luxury division, Plaza Homes, in order to meet the surging demand in the residential sectors, as well as suppliers of products like Symons forms in this area. This is not unique to Plaza Construction, as non-residential contractors have surged in the home building space recently.
Another change for Plaza Construction comes with their newly appointed CEO, Brad Meltzer, who joins on the heels of long-time executive Richard Wood. Meltzer says the decision to refocus business on building luxury homes (with recent projects clocking in as high as 20,000 square feet) was inspired by demands in the market and from their existing clients.
“The demand has been significant,” Meltzer said. “We’ve been receiving calls asking us to do it, as opposed to us chasing clients, which is the normal way business works. We decided, let’s redouble our efforts and focus on it.”
The change comes as demand in the residential market has spiked, overflowing to necessitate non-residential contractors to tackle the number of open housing jobs. Other non-residential firms have deliberately pivoted toward building homes in order to stay in business as COVID-19 and economic concerns impact commercial budgets.
One example is AA Jedson Company, another New York City firm. For years, AA Jedson Company functioned as a specialty general contractor, focusing on restaurants and gyms. In 2020, the firm changed gears and began taking on affordable housing projects, which have been deemed essential and therefore guarantee business despite any pandemic-related changes to the market.
AA Jedson’s president, Michael Bordes, told Construction Dive in late 2020, “Nobody is looking to open new restaurants or gyms at this point. So we’re turning to our fallback, which is housing.”
Rising Demand for Housing
While commercial construction and concrete forms supply has been impacted negatively by the pandemic, the same is not true of residential construction. As the non-residential sector sees record numbers of projects shelved, canceled, or shuttered, homebuilding has boomed, particularly for buyers seeking single-family homes in less densely populated areas outside of urban centers.
This demand has led employment levels in residential construction to rise to pre-pandemic levels, while non-residential construction has only recovered 60% of the jobs lost between February and April of 2020, according to the Associated General Contractors of America. This has led the flourishing commercial contractors to take on the excess demand for housing jobs. Suppliers of Symons forms and other necessary tools for residential construction have also seen sustained or rising workloads.
Based in Dallas, Texas, National Roofing Partners is a roofing service provider that works with commercial contractors, serving non-residential customers nationwide. Again, National Roofing Partners has pivoted toward residential work in recent months. Rather than their typical clients like Tuesday Morning or Kohl’s, they now spend most days working with smaller maintenance and service projects. Even as demand begins to return in the commercial sector, NRP has established a long-term partnership with a residential roofing firm to field these requests that are keeping their sales pipeline full.
“So now, if we get a lead on residential – which I got six of today – I just forward that to them,” says Tony Rader, the Vice President of Sales at NRP. “Normally, we would just say that’s not what we do. But now, we’ve got the ability to take care of that for them, so we’re doing it.”
A New Profit Stream
Ken Simonson, the AGC’s chief economist, says he has not seen any specific data to show that non-residential contractors are performing more residential work. “But I suspect that is what’s happening,” Simonson says. “The switch just may not show up fully in the data.”
Simonson also notes that during the housing boom between 2004 and 2006, residential construction spending increased at a faster rate than the corresponding employment numbers. He attributes this to non-residential contractors doing more residential work to meet demand, similar to what may be happening today.
“Conversely, when non-residential construction continued increasing from 2006 to 2008, firms that had concentrated on residential – especially multi-family – switched to the then-hot office, retail, and other non-residential work,” Simonson says. Now, as history may be repeating itself in the commercial sector, those contractors who have begun to work in housing don’t necessarily see that profit stream going away, even when the COVID-19 crisis is behind us.
Meltzer says, “It’s the natural instinct for people to try and look for other areas that might fill a void. In some cases, it might fill a temporary void, and then end up becoming a business that you build upon for the future.”
Whether you are building for residential or commercial, the right supplies will remain crucial in the near future. Visit Forming America for quality Symons forms today.