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2005 Forecast - Steady Growth, Solid Industry, Stable Economy

Construction has been the cornerstone of the economic recovery and in 2004 this certainly was the case. In the upcoming year the outlook is good, if not great, as the nation settles into a smooth, post-election rhythm. With the building industry leading the way again, slow but solid growth will be the norm. If the Fed can keep inflation under control while keeping interest low enough for investment, 2005 will be another year to remember for the construction industry.

Industry Leaders Look to 2005

When the December issue rolls around, it's time for forecasts. So, here goes. I contacted seven leading landscape firms/companies/organizations; two landscape architectural firms (HOK and EDAW); two building groups (Del Webb and the National Association of Home Builders); two nurseries (Shemin Nurseries and ValleyCrest Companies); and the Brick Industry Association. Here were the questions:

  • What's the outlook for your industry/firm for 2005?
  • Where's the growth in your firm/business?
  • Where's the growth in your industry?
  • What are the new trends?

Landscape Architectural Firms

The HOK Planning Group St. Louis, Mo.
www.hok.com
Chip Crawford,
HOK Planning Group practice director

HOK, Hellmuth, Obata + Kassabaum, Inc., founded in 1955 in St. Louis, Missouri, is a global provider of design and project delivery services, with 1,600 professionals linked across a network of offices in North America (New York, Chicago, St. Louis, Atlanta, Dallas and Los Angeles), Latin America, Europe and Asia--21 offices in all. Each office is led by its own management team, but the HOK people are linked by the shared mission passed down by HOK founder Gyo Obata. Industry surveys consistently rank HOK among the world's leading design firms.

We asked the St. Louis office, the HOK Planning Group, for a forecast. Chip Crawford, the practice director, responded.

Report by Chip Crawford, HOK Planning Group practice director

What is the outlook for the industry in 2005?

HOK: It's a great time to be a part of our industry. With global environmental and health issues at the forefront, never before has there been as much emphasis on planning for and getting ahead of development trends. As planners, landscape architects and urban designers, our ability to tackle these complex environmental, economic and social challenges continues to expand our role on design teams. And if we work hard, our impact and the value we add, will only grow in importance.

Where's the growth in your firm/group?

We continue to see an expanding market in the master planning of new communities and higher-education institutions, particularly in the Middle East, Asia and India. However, due to the growing scarcity of good land with connections to transportation, we are also seeing a significant rise in regional planning, suburban retrofit and urban revitalization projects. These reflect a heightened sensitivity to the environmental and health hazards of sprawling development, as well as state and local government smart growth legislation. An integral component of these projects is our growing practice in creating regional park, open space and greenway systems. Related to everything we do is a steadily increasing mandate to integrate and authenticate our environmental stewardship through tangible mechanisms such as the LEED(R) rating system (Leadership in Energy and Environmental Design), and the Charter of the Congress for New Urbanism (CNU).

Where's the growth in the industry?

The industry's expansion closely aligns with the growth of the HOK Planning Group's global practice:

  • Inner cities are continuing to reinvest in "green infrastructure," such as parks, public spaces, streets and transit projects.
  • Brownfields and urban infill/revitalization projects are on the rise as a result of 2002 Brownfields legislation that strives to level the playing field through incentives and grant programs.
  • Existing suburban developments are focusing on the critical issues of densification, mixed use, walkability and transit accessibility.
  • Additional funding for parks and recreation is spawning an increase in the planning of greenway, park and open space systems, not just for environmental gains, but for economic stimulation for communities as well.
What are the new trends in the industry?
  • Development projects are increasingly more complex and involve multiple stakeholders, regulating bodies and public/private partnerships.
  • State and local mandates for smart growth and sustainability, combined with increasing energy and material costs, are driving the market for innovation and environmental stewardship.
  • Form-based zoning is taking hold as land uses are more compatible than they used to be.
  • Everything is coming together as mixed-use developments, more than ever before. Understanding the complexities and interdependence of a variety of land uses is critical.
  • Clients are increasingly looking for a single entity to plan, design, construct and install landscapes and this integrated approach allows project delivery in a shorter time at the best cost.

EDAW

Headquarters: San Francisco
www.edaw.com
Joe Brown, president, CEO; Barbara Faga, chairperson

For more than 65 years, EDAW's collaborative approach to landscape architecture, planning/urban design, environmental planning and economic, social, and cultural services has shaped sustainable environments across the globe. EDAW has 25 offices and over 1,100 professionals working worldwide. EDAW's leadership includes president and CEO Joe Brown and chair Barbara Faga,

EDAW summarizes it work with the acronym DEEP, design, environment, economics, and planning.

Report from Sandy D'Elia, vice president of strategic development

  1. The outlook for the landscape architecture industry in 2005 is relatively flat, mostly due to issues of global economics. Shifts in jobs from developed countries to developing countries, heavy reliance on fossil fuels and the increasing expense of those fuels, flat or stabilizing population growth coupled with demand of an aging society will tax the growth and development that will impact our industry.
  2. EDAW's growth will continue to be in Asia: China will grow, but not at the rate it has in past years. Southeast Asia is now emerging. In Europe the growth will be concentrated in fringe areas: under-utilized urban areas and second generation development (development in already developed areas).
  3. The industry's growth will be mixed. Growth will take place in targeted opportunity areas around urban and suburban development of under used land, transit and transportation-related development, large scale greenfield and brownfield development (communities), geographical pockets of growth based on population shifts, and in cities with more complex economic bases, cultural appeal and warmer climates.
  4. New trends: value of parks in urban areas, postindustrial site development, and fusion between the environment and design

ValleyCrest Companies

Calabasas, Calif.
www.valleycrest.com
Burton Sperber, chairman, CEO
Richard Sperber, president

Burton Sperber started a landscape nursery business in 1949 with a wheelbarrow, some tools and about $700. The work was primarily residential yards, but evolved into creating complete gardens (ponds, waterfalls, fence overhangs, concrete work) and acquiring expertise in tree moving and selling retail nursery products. In the '60s, '70s and '80s, ValleyCrest Landscape Nurseries acquired a number of landscape companies, and by 1998 was the largest landscape contractor in the country. From a $700 company to well over $700-million, VallleyCrest Companies now employ over 8,000 people. Some trot out the Horatio Alger cliche, but Alger's successes were modest--ValleyCrest's is huge. The company's five business units are Landscape Development, Golf Course Maintenance; Landscape Maintenance; Tree Company and U.S. Lawns.

On Oct. 5, ValleyCrest acquired the Omni Landscape Group which will be integrated into the landscape maintenance division. The move expands ValleyCrest's operations in Georgia, Pennsylvania, Maryland, Virginia, New York, and New Jersey. ValleyCrest expects the transaction to add approximately $50 million in revenue and 700 people to its team.

This year, ValleyCrest moved a few hundred yards uphill from its home for the last 25 years into a new three-story, 80,000 sq. ft. office complex (with a 273 space garage). Opening ceremonies were held Oct. 14, 2004. Burton Sperber, founder, chairman and CEO of ValleyCrest, believes it's the people not the numbers that make a company.

Statement from Richard Sperber, president, ValleyCrest Companies

ValleyCrest continues to grow in all areas, but especially in landscape maintenance services. We see great opportunities for career growth in our company over the next several years and are actively hiring at all levels to support our expansion in new and existing markets.

We will grow by dedicating ourselves to creating completely satisfied customers, by committing ourselves to our employees, and by adhering to the highest standards of operational and professional excellence.

As a service company, our success will depend on us making ourselves as important to our customers as they are to us and by remaining landscapers at heart.

Shemin Nurseries, Inc

Danbury, Connecticut
www.sheminnurseries.com
Steffan Burns, president, CEO

Shemin Nurseries, Inc., began in 1955 when Emanuel (Manny) Shemin, converted his family's retail greenhouse and nursery center into a wholesale horticultural distributor. In 1967, Shemin relocated from the Bronx, New York to Greenwich, Conn. and began to develop a one-stop horticultural distribution center for landscape professionals. Whatever the contractor needs is here, whether it's irrigation, hardscapes, lighting or green. By the mid-1970s Shemin had 50 employees, served 3,000 customers and stocked 5,000 items.

Today, Shemin is one of the largest wholesale distributors of nursery products in the U.S. The company oversees its 31 distribution centers serving 15 major metropolitan markets in the northeast, southeast and midwest from its Danbury, Conn. corporate office. Steffan Burns is president and CEO. Mr. Burns' website message says Shemin is always looking to improve its customer service model and finding new products and services for the sourcing needs of landscape professionals.

Statement from Donald Smedberg, vice-president of sales and Marketing.

I spoke with Donald Smedberg, vice-president of sales and marketing for Shemin Nurseries since April 2003. Mr. Smedberg began his career with Shemin in February 1978 at the Greenwich, Conn. location. In 1980, he joined a team who started up the first Shemin expansion location in Burtonsville, Md., where he was greenhouse manager until 1984. In early 1984, Mr. Smedberg became general manager of Shemin International, a diverse business that shipped finished woody ornamental and tropical foliage plant material to a distribution location in Aalsmeer, Holland, and also imported propagating materials from overseas to market and sell to growers throughout North America. In short, Mr. Smedberg has been in management (sales, purchasing and general management) with Shemin Nurseries over 25 years.

Mr. Smedberg noted that the housing and commercial starts have been strong over the last three years, which is indicative of robust business for landscape professionals, and therefore for Shemin. The growth in new commercial and residential starts building this year to the double digits, and Shemin expects that growth to continue to be strong in 2005.

The commercial arena has been strong, with new "big boxes," hotels/arenas and buildings continuing to be built. As for the green side, Mr. Smedberg observed there is an increase in the demand for larger caliber trees. Instead of the 8-10 foot size, the contractors are asking for 14-16 foot trees, a sign that customers are seeking what Mr. Smedberg called "instant landscaping," i.e., a landscape that is already grown. Another trend he noted at Shemin is selling more hard materials and lighting, the result of a strong move in outdoor entertainment, i.e., the building of patios and decks.

When you think of Shemin, you may not think of lighting, but Shemin does it all. Shemin has an "Illuminations" program that invites landscape architects and designers to view the latest in lighting. Shemin also holds seminars on all aspects of landscape contracting at its 31 centers, whether it's how to install a retaining wall or incorporate other erosion control measures, putting down pavers, or installing lighting or irrigation. Still, the green side of the business is the largest aspect of Shemin's business, as it approaches its 50th anniversary in 2005.

Del Webb

Bloomfield Hills, Michigan
www.delwebb.com
Richard Dugas Jr., president, CEO

Since 1960, Del Webb has sold almost 80,000 homes for the "active adult buyer," the fastest-growing demographic segment of the market. The business of Del Webb is focused on creating suitable, "highly amenitized" environments for the affluent baby-boomers, and, indeed, Del Webb is the nation's leading builder for this 55 and older community of active adults who don't intend to putter around the garden and play shuttle board in the autumn of their years. Del Webb's large-scale communities are located in Arizona, California, Florida, Illinois, Nevada, New Jersey, South Carolina, Texas and Virginia.

The Number of Active Adult Communities in the U.S. Will Grow Substantially in 2005 and Beyond

Forecast by Mark Marymee, Del Webb director of corporate communications

As America's Baby Boomers, the generation born between 1949 and 1964, continue to age, the prospects are tremendous for homebuilders focusing on this major home buying demographic. Del Webb, a brand of Pulte Homes, Inc., plans to substantially increase the number of active adult communities it opens throughout the United States in 2005.

Baby Boomers account for approximately 77 million Americans, or nearly 25 percent of the entire U.S. population. They have an annual estimated spending power of approximately $2.1 trillion and the total number of Boomer households is 45.8 million.

The financial wherewithal of this generation of consumers is impressive. Pulte estimates that close to 50 percent of homebuyers in its active adult communities pay cash, making them less susceptible to interest rate swings.

Del Webb, which started building active adult communities in the Phoenix area in 1960, is the nation's leading builder in this booming market for adults age 55 and older. The company currently has 33 active adult communities open for sale in 13 states across the United States.

In 2005, the company plans to open as many as 10 new communities throughout the country, including developments in northern and central California, Colorado, Florida, Michigan, Ohio, South Carolina, Texas and Virginia.

Several trends continue to develop in the active adult community market. First, while the number of actual retirees buying homes in active adult communities remains high, the number of people between the ages of 55 and 65 moving in to Del Webb communities is growing. Many of these people are years away from retirement and they plan to either continue commuting to work in a major metropolitan area or shifting gears and starting a new career from home.

A large component of these people are empty nesters, parents who have watched their last child head off to college or to start a career and who now find themselves ready to try something new. Many want to sell the big house they raised their children in and downsize into a smaller home with less maintenance.

At the same time, however, they want homes that reflect their new found freedom to socialize with friends and colleagues. Many want single-family detached homes with a master bedroom suite on the ground floor. The kitchen in the home is spacious and generally opens directly into an adjacent living space, so the homeowner can prepare meals and socialize with friends easily.

One changing recreational trend at today's active adult community is less demand for golf and a far greater demand for other outdoor activities. Many Del Webb active adult communities now offer outdoor walking and biking trails, jogging paths and nature areas. One planned community in northern California will offer a dog walking park for residents, while another earmarked for South Carolina plans to offer residents canoeing and kayaking along a river that runs adjacent to the development.


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December 9, 2019, 10:21 am PDT

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