June 26: Volume 32, Issue 1
By K.J. Quinn
A continued increase in hard surface consumption led to another year of growth in the commercial market sector in 2016.
FCNews research showed the commercial market sector generated $6.396 billion in flooring sales—down slightly from 2015 but up nearly 20% from 2011. Tipping the scales is carpet, which generated roughly $3.923 billion in sales, accounting for just over 61% of the commercial market. Observers estimate more than 80% of the business is generated from specified contract with the remainder coming from Main Street applications. By comparison, carpet accounted for roughly 58% of the commercial market five years ago.
While carpet’s share of the commercial market hasn’t changed appreciably since 2011, the industry is seeing a shift in the overall product mix. “Carpet tile is claiming share from broadloom,” stated Matt Miller, president, Interface Americas, citing two main factors. “Cost improvements and added options at the low end make it a more competitive, appealing alternative to low-end commodity broadloom, and added design at the high end expands the settings in which it is used and provides wayfinding and purposeful space through design.”
Broadloom remains ahead in volume with an estimated 55% to 60% share, a number that decreased from the prior year as hard surfaces and carpet tile gained coverage in the hospitality business. Still, broadloom remains a viable option for commercial applications requiring a luxurious look and feel. “You can also get many different looks and can easily customize color options if you have enough square footage,” said Carla Remenschneider, RID, IIDA, director of interiors, Fanning Howey, an architecture and engineering firm based in Indianapolis. “You can also use the tiles to create wayfinding elements.”
The commercial hard surface segment put in a respectable performance as well, reaching approximately $2.473 billion in sales, FCNews estimates show. Much like soft goods, hard surface commercial activity is also up from five years ago. Back then, resilient, ceramic, wood and laminate combined to represent $2.2 billion. Industry observers cite a broader shift in the types of materials being specified for commercial applications.
“We believe the movement from soft surface to hard surfaces, as seen in the residential category, is also working its way into certain commercial segments, such as hospitality and corporate,” said Jamey Block, Armstrong’s vice president, resilient product management. “Spaces that traditionally had been dominated by carpet, such as public lobbies and guest rooms, are now being covered by attractive, durable resilient products like LVT.”
Indeed, innovation is the name of the game in hard surfaces. Ongoing advancements have enabled products such as LVT and ceramic tile to penetrate all market sectors and grow significantly faster than tried-and-true products such as vinyl composition tile (VCT) and rubber. Resilient is the top seller, representing roughly 19.8% of total commercial sales (doesn’t include commercial WPC) in terms of dollars but nearly 50% of the commercial hard surface market,
estimates show. Leading the charge is LVT, which maintained double-digit growth and accounts for about 51.3% of commercial resilient sales and 31.4% of volume.
“The ongoing preference for designing commercial spaces—whether in education, healthcare or senior living—to look more residential in nature has brought popular, proven hard surface products into the commercial arena, as much for the realistic designs as for the durability and ease of maintenance,” Armstrong’s Block said.
Other hard surface categories are growing their share of the market. Research shows ceramic grew its share of the total commercial market to 12.9% in 2016. With respect to commercial hard surfaces, ceramic increased its share of the market from 27.1% in 2015 to nearly 35% in 2016.
Observers say the specified contract market generated the vast majority—70%—of the tile business. “The greatest impact on the ceramic commercial market is the continued development of segments that use a lot of tile in their structures, such as hospitality and education,” noted Gianni Mattioli, executive vice president, product marketing, Dal-Tile.
Manufacturing advances have enabled tile to enter commercial segments previously reserved for carpet and other hard surfaces. For example, there is an influx of unique decorative facings, textures and modular formats. Digital printing technologies are allowing vendors to create 3D visuals that closely resemble wood, stone and concrete looks and apply different gloss levels of glaze, metallic and even texture.
“We’re seeing more and more installations using gauged porcelain tile panels,” said Lindsey Waldrep, vice president, marketing, Crossville. “Because these products can be installed directly over existing surfaces such as old tile and stone, they offer exceptional installation advantages in terms of cost, labor and time savings.”
Designers are finding usage for other hard surfaces, industry members say, although sales of traditional vinyl sheet and floor tile were impacted by softening market conditions last year. VCT remains a fixture in many commercial environments but is no longer considered a low-cost option due to high maintenance over the life of the floor. Workhorse products such as rubber and linoleum are positioned as healthy flooring choices for healthcare and education settings. Estimates show linoleum sales grew between 2% and 4% in 2016, with roughly 90% of sales coming from specified contract.
“Performance encompasses all aspects of linoleum, from durability through being the best product for a healthy indoor environment,” said Denis Darragh, Forbo’s vice president, North America. “The value is simply the lowest cost of ownership of any flooring product.”
Meanwhile, hardwood and laminates—which combined represent roughly 3.2% of total commercial sales—continue to carve a niche in certain retail and hospitality applications. “Laminate has a small share of the commercial market, although it is more popular in Main Street settings,” Block said.
Overall, laminates’ share of the commercial market has been falling over the years. In 2011, the category represented just under 1% of commercial flooring sales; in 2016 that number fell to about 0.4%. Likewise, wood’s share of the commercial market slipped slightly from 5.5% of sales in 2011 to just under 3% last year.
These qualities are welcome in educational facilities, where the passage of school construction bond measures are supporting K-12 school construction, according to published reports. Dodge Data & Analytics predicts institutional building will advance 10% this year, resuming its expansion after pausing the previous two years. “We see an improvement in the overall business conditions in education, which fueled significant growth in that segment,” Forbo’s Darragh stated.
Flooring needs are changing, in part, to adapt to the new design of school learning environments, which are moving away from traditional mundane looks. This is a major reason why products such as LVT, rubber and carpet tile are being specified in K-12 facilities at the expense of VCT. “Carpet tile is overtaking broadloom in education because of design trends and the ability to do selective replacement,” said Mike Gallman, senior vice president, commercial product, Mohawk Group.
Keeping up appearances is especially important in higher education, where recruiting and retaining students often hinges on the quality of academic and living facilities, plus amenities. Industry studies have shown that even sustainability can be a deal breaker. “We are seeing an increased focus on sustainability in designs, which is impacting the decisions of designers,” Dal-Tile’s Mattioli said.
Premium flooring tends to be specified more in higher education, as private schools do not face the same spending restrictions enforced by tighter state budgets. Flooring types vary, as campuses encompass a wide range of end uses, such as dormitories, athletic facilities, class rooms and retail spaces. “Education is shifting from traditional products like VCT into more style forward products like LVT,” said Al Boulogne, vice president of Mannington’s commercial resilient business. “Life-cycle costs are starting to impact purchase decisions.”
Similar to education, healthcare is experiencing a spike in new facilities—specifically clinics, assisted-living communities and urgent care centers—as the business expands to accommodate the needs of an aging U.S. population. While durability, maintenance and budget are still important considerations for flooring, experts say, interior finishes are changing as many healthcare providers strive to create more “homey” environments. “In senior living residences, for example, social and programmatic areas can no longer be institutional, but rather must reflect the needs of the residents,” noted Carol Tobin, principal, Tobin Parnes Design, New York.
Research studies provide evidence that interior design can help influence medical outcomes. “Designing and building healthcare spaces to provide a soothing, quiet healing environment has proven to help patients heal quicker,” noted Jim Bistolas, national healthcare segment director, Gerflor USA. “This results in better (patient review) scores for a facility, which directly impacts their bottom line.”
There are commercial floors with a proven track record in healthcare, which help ease the minds of designers during the specification process, industry watchers say. For instance, resilient, rubber and linoleum are valued for their durability, maintenance, hygienic and slip-resistant qualities. Modular carpet, ceramic, porcelain and terrazzo tile are commonly found in hallways, making it easier to maneuver rolling equipment and mobile aids.
Healthcare is among the strongest markets for homogeneous and heterogeneous sheet goods, where it is used largely in operating and emergency rooms, areas which require floors with little to no seams. “Commercial sheet flooring showed some gains last year, and some of that was due to growth in the healthcare market,” Armstrong’s Block said.
Flexibility is a common theme for flooring laid in corporate environments, the largest segment of the commercial market, representing about 48% of the business, according to FCNews research. Sales grew between 10% and 13% last year as an uptick in new construction, expansions and renovations along with rising corporate profits stimulated demand. Similar to healthcare, a major trend driving interior design in office spaces is creating an environment that makes occupants feel at home.
“For design firms like us, a principal driver is to work with products that push the envelope of sustainability and design creativity,” said Montserrat Aguilar, CID, LEED AP ID+C, an interior project designer at Perkins + Will in New York. “We look to enhance the interior environments we design through the use of healthy materials.”
Corporate offices is probably the most diverse in terms of product selection, observers say, as specs are based on the functional and design needs of the space. “We are seeing carpet tile going into some corporate areas that have had hard surfaces due to the noise factor and discomfort underfoot,” Ralph Grogan, president and CEO, Bentley Mills, explained.
Durability and style are prerequisites for flooring inside retail stores, a sector where sales and consumer spending drive nearly 70% of economic growth. Despite the fact that store construction was subdued and brick-and-mortar footprints shrank last year, interior redesign was quite common as retailers searched for new ways to attract and engage with customers. “A desire by customers for more authentic, sensory and tactile experiences in retail stores has fueled the trend towards natural, reclaimed and artisanal materials that add character and warmth to the shopping environment,” said James Farnell, RDI, international president, Retail Design Institute. “We have witnessed a departure from the classic cost engineered, mass rollout ‘cookie-cutter’ prototype model of the previous decade toward more localized design solutions that connect brands with the neighborhoods in which they are located.”
Carpet tile and LVT are among the leading flooring choices for retail spaces, experts say. Broadloom, ceramic tile and hardwood are being specified in high-end spaces, while resilient, laminates and rubber flooring are utilized in other public areas. Niche, alternative floors—such as reclaimed wood and polished concrete—are finding their way into a number of major store chains as they offer a different twist to products specified in contemporary design.
Renovation was rampant in the hospitality business last year, as the major hotel brands invested millions of dollars to redecorate existing properties and build new ones. “All major hotel chains are continuing to grow, with new builds steadily occurring,” Dal-Tile’s Mattioli said. “Additionally, we have seen incremental new business from boutique hotels.”
Flooring choices vary widely, depending on application and client. Broadloom remains the surface of choice in guest rooms, hallways and certain public spaces, thanks to its plush looks and sound deadening qualities. “There are patterned goods you can do with broadloom that you can’t do with carpet tile,” Bentley’s Grogan pointed out. “The bigger patterns are more difficult to achieve.”
Nature remains a powerful influence in interior design and there is pent-up demand for flooring that replicates elements of the great outdoors. Hard surfaces such as stone, marble, porcelain tile, hardwood and LVT are on the radar, observers say, as designers seek to create modern, residential type looks in spaces which traditionally specified broadloom.