Signs are bullish as delayed projects are restarted and new ones begin to flood the pipeline.
By Robert Isler
The second annual NKBA Global Connect Summit offered an insightful state-of-the industry analysis that can be summed up in two words: very encouraging. The Sept. 9-10 virtual gathering had the goal of explaining and showcasing the North American K&B industry to an international audience.
CEO Bill Darcy began the proceedings with a 30-minute session featuring Todd Tomalak, Principal at NKBA research partner John Burns Real Estate Consulting. Darcy reviewed the K&B world before and after COVID-19. When the 2020 Kitchen & Bath Market Outlook was originally fielded in late 2019, full-year revenues for the industry were initially forecast to grow by 7%, exceeding $158 billion. The pandemic-fueled economic shutdown caused a steep downward revision to $131 billion, nearly 12% below the previous year. Even more sobering, the remodeling portion was expected to take the brunt of the hit, with a forecasted 15% shortfall compared to a 9% drop in new construction.
65% of the 77 million homes in the U.S. are over 30 years old, making them prime candidates for remodeling.
The latest indicators, however, tell a very different story. Pointing to strong fundamentals, Darcy explained that 65% of the 77 million homes in the U.S. are over 30 years old, making them prime candidates for remodeling. He also reminded viewers about recent findings revealing that 70% of consumer projects postponed or cancelled due to the pandemic are expected to be reinstated before year’s end, adding, “I’m very optimistic about the industry’s long-term growth.”
For his part, Tomalak shared that in the soon-to-be-released second update of the 2020 Kitchen and Bath Market Outlook, a joint undertaking between JBREC and NKBA, full-year K&B revenues have been revised upward to $139 billion from the previous $131 billion. Double-digit losses in the luxury remodeling segment are now expected to be trimmed to mid-single digits, with lower-end remodels very close to flat.
He added that the current recession — one of the most severe in the history of JBREC’s data-gathering — is clearly showing a recovery that will be led by housing. He explained that orders for new homes have been exhibiting staggering Y-O-Y increases of 60% for several months now, with temporary logistical issues related to actual building the only impediment. Between that outlook and the large pipeline of postponed orders expected to be filled, Tomalak anticipates very strong industry revenues in 2021.
Part 2 will cover insights into post-COVID design elements and spending shifts of consumers.
