For landscape contractors looking to offer irrigation services or expand their existing irrigation businesses, Jeff Carowitz says they should set their sights on growth.
Carowitz, senior consultant with Strategic Force Marketing, San Marcos, Calif., outlined his “Strategic Overview of the Irrigation Industry” April 24-26 at the Hunter Irrigation Industry Forum in San Marcos, Calif. He talked about what fueled irrigation service growth the past 10 years and offered an outlook for the next decade.
Over the past 10 years, the irrigation industry has grown on average at twice the rate of the annual GDP at 6 to 7 percent a year (the GDP has only grown 2 to 3 percent a year), Carowitz says. “The number of contractors offering irrigation services has outpaced industry growth,” he adds. “And the installed base of irrigation systems on residential and commercial properties has dramatically increased during the past decade.”
The factors that affect irrigation industry growth, including new construction, home improvement, demographic and geographic changes, and hobby and leisure pursuits, have remained strong, Carowitz shares, adding that these factors also show long-term growth potential.
First, Carowitz points out housing statistics – a market that moves in cycles based on job growth, interest rates and consumer confidence. According to Carowitz’s research from Economy.com, 1.8 million new jobs on average will be added over the next 10 years. He also outlined Harvard University’s Joint Center for Housing Studies’ September 2005 Report, noting that income growth and unemployment rate declines can more than offset the rising interest rates the industry is currently experiencing.
“The bottom line on housing is that the long-term trend is positive and housing is moving ahead of the rate of the general economy despite short-term ups and downs,” Carowitz says, adding that according to The Brookings Institution, in 2030 about half of the buildings in which Americans live, work and shop will have been built after the year 2000 – most of the space being residential – showing the continued increase in home building. “When housing construction is strong, the demand for irrigation services increases.”
Carowitz continued to cite The Brookings Institution, pointing out that states with the largest projected number of housing units will include California, Florida and Texas. In Arizona and Nevada, more units will be built in the next 30 years than existed in 2000. According to Carowitz, the study says that “the volume of development to be seen during the next generation will be nothing short of staggering.”
In some instances, housing customer changes are fueling this growth. For instance, Carowitz says that, according to the Intergenerational Wealth Transfer, more parents are providing the down payment to permit their children to buy new homes earlier in their lives. Additionally, U.S. immigrants are becoming increasingly important to the housing industry. In fact, second generation immigrants in the zero to 20 age group will become the prime home buyers and builders of the next decade, according to the Joint Center for Housing Studies Report.
To obtain these homes with larger properties as a bonus, more home buyers also are commuting further for greener spaces. The Harvard Study mentions that in 1970 only 16 metropolitan areas had at least one to five households living more than 20 miles from the central business district. In 2000, that number jumped to 45 metropolitan areas.
In addition to home building and buying, remodeling is also a factor that will continue to fuel irrigation industry growth, says Carowitz, citing that according to a 1995 American Housing Survey, nearly half the homes in the United States are more than 35 years old. In 2006, Barron’s predicts a 5 to 7 percent increase in the growth of remodeling. “There is a cocooning trend that is driving consumers to spend more time and money on the home,” he explains. “This is driving home entertainment, home shopping and home remodeling.”
The baby boomer generation moving into retirement should also boost landscape and irrigation sales into the future, Carowitz says. This is mainly because their No. 1 request for an active adult community amenity is full maintenance and lawn care (80 percent reporting), followed by walking areas (79 percent), according to the Harris Interactive 2005 “Baby Boomers Housing Study.”
The study also reported that more than 50 percent of respondents under age 60 said they will buy a new home for retirement, and roughly 45 percent said they would move out of state for retirement. “When asked what state they would move to for retirement, the baby boomers listed their top six as Florida, Arizona, North Carolina, California, Texas and Nevada,” Carowitz says.
On the commercial side of the industry, Carowitz says corporate balance sheets are strong and that is allowing businesses to construct new plants and office spaces. “The national office vacancy rate is now below 5 percent, so there is a rebound ahead,” he explains.
Finally, because gardening continues to lead the list of American hobbies, the irrigation industry will benefit, Carowitz remarks. He points to a Harris Interactive 2004 National Gardening Survey, that reports three out of four (82 million households) Americans currently participate in gardening activities, and that gardening is considered the most popular outdoor activity/hobby above amateur sports. “The relatively low cost of a home irrigation system – $3,000 for a system on a $350,000 home,” Carowitz adds, “will also drive this growth.”
In addition to his 10-year outlook, Carowitz suggests 2006 could be a robust growth year for irrigation professionals.
Initially, continued strong demand from new construction and remodeling will fuel growth, he says. And irrigation manufacturers are reporting that their early shipment indicators of irrigation products are strong in all sectors of the landscape market.
Also, this winter contributed to a longer and stronger year for irrigation contractors. The National Climatic Data Center has called the 2005/2006 winter the “fifth warmest winter on record,” which has added two to three additional months to the construction season in many parts of the United States. As a result, national heating use was down 11 percent, Carowitz says. “This is a dramatic increase in work days for contractors,” he points out.
Carowitz, senior consultant with Strategic Force Marketing, San Marcos, Calif., outlined his “Strategic Overview of the Irrigation Industry” April 24-26 at the Hunter Irrigation Industry Forum in San Marcos, Calif. He talked about what fueled irrigation service growth the past 10 years and offered an outlook for the next decade.
Over the past 10 years, the irrigation industry has grown on average at twice the rate of the annual GDP at 6 to 7 percent a year (the GDP has only grown 2 to 3 percent a year), Carowitz says. “The number of contractors offering irrigation services has outpaced industry growth,” he adds. “And the installed base of irrigation systems on residential and commercial properties has dramatically increased during the past decade.”
The factors that affect irrigation industry growth, including new construction, home improvement, demographic and geographic changes, and hobby and leisure pursuits, have remained strong, Carowitz shares, adding that these factors also show long-term growth potential.
First, Carowitz points out housing statistics – a market that moves in cycles based on job growth, interest rates and consumer confidence. According to Carowitz’s research from Economy.com, 1.8 million new jobs on average will be added over the next 10 years. He also outlined Harvard University’s Joint Center for Housing Studies’ September 2005 Report, noting that income growth and unemployment rate declines can more than offset the rising interest rates the industry is currently experiencing.
“The bottom line on housing is that the long-term trend is positive and housing is moving ahead of the rate of the general economy despite short-term ups and downs,” Carowitz says, adding that according to The Brookings Institution, in 2030 about half of the buildings in which Americans live, work and shop will have been built after the year 2000 – most of the space being residential – showing the continued increase in home building. “When housing construction is strong, the demand for irrigation services increases.”
Carowitz continued to cite The Brookings Institution, pointing out that states with the largest projected number of housing units will include California, Florida and Texas. In Arizona and Nevada, more units will be built in the next 30 years than existed in 2000. According to Carowitz, the study says that “the volume of development to be seen during the next generation will be nothing short of staggering.”
In some instances, housing customer changes are fueling this growth. For instance, Carowitz says that, according to the Intergenerational Wealth Transfer, more parents are providing the down payment to permit their children to buy new homes earlier in their lives. Additionally, U.S. immigrants are becoming increasingly important to the housing industry. In fact, second generation immigrants in the zero to 20 age group will become the prime home buyers and builders of the next decade, according to the Joint Center for Housing Studies Report.
To obtain these homes with larger properties as a bonus, more home buyers also are commuting further for greener spaces. The Harvard Study mentions that in 1970 only 16 metropolitan areas had at least one to five households living more than 20 miles from the central business district. In 2000, that number jumped to 45 metropolitan areas.
In addition to home building and buying, remodeling is also a factor that will continue to fuel irrigation industry growth, says Carowitz, citing that according to a 1995 American Housing Survey, nearly half the homes in the United States are more than 35 years old. In 2006, Barron’s predicts a 5 to 7 percent increase in the growth of remodeling. “There is a cocooning trend that is driving consumers to spend more time and money on the home,” he explains. “This is driving home entertainment, home shopping and home remodeling.”
The baby boomer generation moving into retirement should also boost landscape and irrigation sales into the future, Carowitz says. This is mainly because their No. 1 request for an active adult community amenity is full maintenance and lawn care (80 percent reporting), followed by walking areas (79 percent), according to the Harris Interactive 2005 “Baby Boomers Housing Study.”
The study also reported that more than 50 percent of respondents under age 60 said they will buy a new home for retirement, and roughly 45 percent said they would move out of state for retirement. “When asked what state they would move to for retirement, the baby boomers listed their top six as Florida, Arizona, North Carolina, California, Texas and Nevada,” Carowitz says.
On the commercial side of the industry, Carowitz says corporate balance sheets are strong and that is allowing businesses to construct new plants and office spaces. “The national office vacancy rate is now below 5 percent, so there is a rebound ahead,” he explains.
Finally, because gardening continues to lead the list of American hobbies, the irrigation industry will benefit, Carowitz remarks. He points to a Harris Interactive 2004 National Gardening Survey, that reports three out of four (82 million households) Americans currently participate in gardening activities, and that gardening is considered the most popular outdoor activity/hobby above amateur sports. “The relatively low cost of a home irrigation system – $3,000 for a system on a $350,000 home,” Carowitz adds, “will also drive this growth.”
In addition to his 10-year outlook, Carowitz suggests 2006 could be a robust growth year for irrigation professionals.
Initially, continued strong demand from new construction and remodeling will fuel growth, he says. And irrigation manufacturers are reporting that their early shipment indicators of irrigation products are strong in all sectors of the landscape market.
Also, this winter contributed to a longer and stronger year for irrigation contractors. The National Climatic Data Center has called the 2005/2006 winter the “fifth warmest winter on record,” which has added two to three additional months to the construction season in many parts of the United States. As a result, national heating use was down 11 percent, Carowitz says. “This is a dramatic increase in work days for contractors,” he points out.
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