Guest Blogger - Jim Plucker, Architectural Services
Hearth and Home Technologies
Are downturns always a period of forced change known for belt-tightening and cost- elimination, intensely focusing on maintaining profits while exiting markets that don’t have enough potential?
Yes, if you are going to survive, these changes will help your odds of at least staying in front of your customers if not in front of your competition. And what happened to the bottom line? Even though organizations were efficiently structured for a base of 1.4 million starts a year, the customer base just turned small and stingy. Now, smaller competitors have an efficiency edge and can take healthy slices of tasty market share.
The messages given this June at The Multifamily Trends Conference in San Francisco had generous doses of these types of reality statements along with more forecasting than is usually seen at these meetings.
Bob Gardner, of Robert C. Lesser & Co. , a large real estate consulting firm in Los Angeles, served it up in easy-to-understand terms and graphics. What follows are some of the highlights of his presentation... (Download his presentation slides here)
“Markets always correct on upside and downside”
“Real estate downturns force change”
“Home prices have the biggest decline in recent years (since before ’87)”
“New home sales off 40% since peak in 2005”
But how about growth? Many company fortunes have their roots in downturns and the smart firm takes advantage of great opportunities that emerge during times of change. The key is to have a vision to do so.
Mr. Gardner had analyzed enough demographic data to uncover some demographic realities developing over the next 12 years.
Hearth and Home Technologies
Are downturns always a period of forced change known for belt-tightening and cost- elimination, intensely focusing on maintaining profits while exiting markets that don’t have enough potential?
Yes, if you are going to survive, these changes will help your odds of at least staying in front of your customers if not in front of your competition. And what happened to the bottom line? Even though organizations were efficiently structured for a base of 1.4 million starts a year, the customer base just turned small and stingy. Now, smaller competitors have an efficiency edge and can take healthy slices of tasty market share.
The messages given this June at The Multifamily Trends Conference in San Francisco had generous doses of these types of reality statements along with more forecasting than is usually seen at these meetings.
Bob Gardner, of Robert C. Lesser & Co. , a large real estate consulting firm in Los Angeles, served it up in easy-to-understand terms and graphics. What follows are some of the highlights of his presentation... (Download his presentation slides here)
“Markets always correct on upside and downside”
“Real estate downturns force change”
“Home prices have the biggest decline in recent years (since before ’87)”
“New home sales off 40% since peak in 2005”
But how about growth? Many company fortunes have their roots in downturns and the smart firm takes advantage of great opportunities that emerge during times of change. The key is to have a vision to do so.
Mr. Gardner had analyzed enough demographic data to uncover some demographic realities developing over the next 12 years.
First Reality:
Aging Baby Boomers want to shift into empty nests while a smaller size population of Gen X will not create a lot of demand for those mature family suburban homes.
The Boomers are hanging on tight. Most are ready to downsize soon, but they shouldn’t expect to see their home prices return to the peak levels of 2005 until full pricing returns around 2012.
Boomers still have a lot of options and they’ve demonstrated an interest in multifamily living. But, it has to have a marketing hook whether it’s upscale and urban or community-based living in the traditional suburbs, it must have personal appeal and enduring value.
Second Reality:
Gen Xers, a significantly smaller group than Boomers, are moving into their First Time and Mature family home. Suburban home prices may be dropping, but big price increases in food and gas make suburban living expensive, so Gen X wants to be in a smaller home close-in to work or near mass-transit.
That’s why there will be a growth in the 3 bedroom family condo and luxury apartments. The urban cities still have work to do on their schools systems, but this is a big market that wants urban living in bigger family units.
Future Reality:
Gen Y, the new “pig in the python”, won’t begin to start absorbing homes until they start to enter the “For-Sale” market in 2012. They represent the biggest first-time home buyer group ever. We can expect 1 million new households to be entering the market each year after 2015.
Although it’s hard to predict their preferences as they start family homes, Gen Y is demonstrating a desire for urban-rental lifestyle with floor plans and living areas designed for entertainment. Their taste for quality won’t match their earning capacity, so living units will be smaller with a focus on design versus size in order to have the amenities they most desire.
Suburbs will need to evolve to remain attractive to Gen Y:
A. More walkable areas, including new and existing town centers – urbanizing suburban commercial nodes.
B. Master-planned communities with greater variety of product and higher connectivity.
C. Driven by convenience, connectivity, and a healthy work- life balance to maintain relationships
• 1/3 will pay more to walk to shops, work, and entertainment.
• 2/3 say that living in a walkable community is important.
• More than 1/2 of Gen Y would trade lot size for proximity to shopping or to work even among families with children.
• 1/3 or more are willing to trade lot size and “ideal” homes for walkable, diverse communities.
So what are marketers to do?
Dust off your old strategy and breathe in some new ideas and motivating direction.
1. Conduct strategic planning or update the company’s strategy. Critique project or portfolio performance or positioning
2. Evaluate project performance vis-à-vis the marketplace and take action to improve performance.
3. Analyze market opportunity. Seek advice on how to reposition the company in current markets and what new markets and/or product types to enter
4. Understand demographic trends and consumer demands.
5. Develop a strategy for meeting the changing demands of Boomers and Gen Y.
6. Develop a green strategy.
7. Think about how green will impact your company, products, hiring practices, philosophies, etc.
8. And always remember...
2. Evaluate project performance vis-à-vis the marketplace and take action to improve performance.
3. Analyze market opportunity. Seek advice on how to reposition the company in current markets and what new markets and/or product types to enter
4. Understand demographic trends and consumer demands.
5. Develop a strategy for meeting the changing demands of Boomers and Gen Y.
6. Develop a green strategy.
7. Think about how green will impact your company, products, hiring practices, philosophies, etc.
8. And always remember...
“Markets always correct on upside and downside”
_____________________________________________________________________
Jim Plucker is the manager of Architectural Services at Hearth & Home Technologies, the leading manufacturer of hearth systems. His focus is the growth of new business among architects, designers, and multifamily developers. He also develops and administers the continuing education courses offered nationwide by sales and field representatives.
Jim is actively involved in the Education Committee of the Mississippi Headwaters chapter of the US Green Building Council, Jim is also the corporate contact with USGBC, the American Institute of Architects and the International Code Council.
Contact Information:
Jim Plucker
Manager, Architectural Services
Hearth & Home Technologies, Inc.
20802 Kensington Blvd.
Lakeville, MN 55044
952-985-6661
pluckerj@hearthnhome.com
Contact Information:
Jim Plucker
Manager, Architectural Services
Hearth & Home Technologies, Inc.
20802 Kensington Blvd.
Lakeville, MN 55044
952-985-6661
pluckerj@hearthnhome.com
