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NeoCon2010: Commercial market shows signs of life

CHICAGO—After more than a year of feeling the affects of a recession that played havoc with the residential market for nearly four years, the architectural and design community is beginning to see signs of life. That was the prevailing sentiment at NeoCon 2010, which was marked by an uptick in attendance, standing-room-only carpet showrooms, gains in exhibitors and exhibit space and, most importantly, immeasurable optimism.

Attendees and exhibitors agreed that NeoCon, North America’s largest design expo for commercial interiors, was indicative of a show that reflected an industry slowly starting to recover from the economic hardships of the past 12 to 18 months. And as the economy gains momentum, many see pent-up demand fueling growth through the year.

Mark Falanga, vice president of Merchandise Mart Properties, owner of NeoCon, said, “We had about a 28% increase in exhibitors over last year and around a 10% increase in attendance. This shows us people are expecting, if not already seeing, an uptick in business.”

Falanga had been hearing that A&D firms were bringing more people this year than last. “For example, HOK last year brought only a handful of people,” he said. “This year it’s close to 40.”

More important than pure numbers, the quality of the individual was up, Falanga said. That is a result of the paring down of A&D firms, so the people still in the game are either involved in projects or pursuing projects. “None of these design firms are making casual decisions and letting everyone in the office come to the show. People are here purposefully. They have projects on the board, projects in the pipeline and are here to find ways to provide clients with their best solutions throughout the year.”

Falanga added exhibitors were not only noticing the increase in attendance, but they have been taking the challenging environment in stride. “We’re in a mature industry. As a result of that, most of these companies have been through multiple recessions. They recognize that when a market goes down, it will come back up. They posture themselves for that. It’s a forward-looking industry.”

With that said, Falanga was seeing much more innovation and marketing than last year on behalf of the exhibitors. He talked about the ongoing “decommodification” of the marketplace with flooring at the forefront. “Flooring has become a leader in creating unique designs in a category that used to be a commodity a decade or two ago. It has also been a leader in the environmental movement, and that has been infectious to so many product categories.”

The significance of the category is not lost on Falanga as it represents the second largest at NeoCon in terms of both number of exhibitors and square footage. Flooring is also unique in that manufacturers focus on all commercial markets as opposed to many companies that target just one particular segment.

Corporate is the largest of the commercial segments, and for the first time in a long while the market is looking up. “In every city leasing velocity has picked up,” Falanga said. “New York velocity was up 47% first quarter 2010 over 2009. Companies are shifting from one location to another to get into a renovated space. With landlord concessions, tenants are buying flooring. That’s all in the pipeline right now. Attendance at this NeoCon is reflective of the design community understanding that dynamic.”

The brightest segment right now is government, a sentiment echoed by many exhibitors. “Government business is up 14%,” Falanga said. “While corporate showed massive declines over the past few years, government expenditures on furnishings have increased dramatically.”