And You Shall Beat Your Swords Into Timeshares...?

Usually, we think that recycling is a good idea because we want the world to remain habitable for longer.  


Then there's another school of thought: recycling because it won't remain habitable.  


A developer in Kansas, Larry Hall, has remodeled a 1960's- era missile silo into 1,820-square-foot units condo units. Underground.  He's promoting it as a safe place to ride out any number of possible coming apocalypses.  He claims they will have site-grown food and purified well and rain water to house 70 people in lockdown for years. 


The condo units sell for $2 million each, and he sold out all units in one month.  Read more about it on Cnet.com.

This is not the only former missile silo that has been converted for underground living, and more are available.  You can buy one for under $300,000 at www.missilebases.com/properties.  Think of how much you save on a remodel where you don't have to replace windows or apply exterior finishes!

New ADA Rules In Effect

The compliance date for the revised 2010 ADA Standards for Accessible Design recently passed on March 15, 2012.  The new standard applies to new construction and remodels begun after that date.  This is the first overall update since the 1991 standards.

The ADA standards have a far reaching impact on many building products, including doors, paving, cabinets, countertops, lighting, hand rails, plumbing fixtures, toilet room accessories -- almost anything that someone in a building can actually touch or see.

The standards may also impact your own place of business and how you provide customer service.

Some requirements have been beefed up, others have been backed off. An article in the current issue of Landscape Architecture Magazine details some of the changes that affect exterior design, for example.  Accessible parking spaces in very large parking lots will now need a higher percentage (1 in 6) to be van-accessible.  By contrast, Section 705, the requirement for tactile warning devices (truncated domes - that small field of yellow bumps that have been appearing on curb-cuts and at the edges of parking lots, which warn visually-impaired pedestrians that they are about to walk into traffic)  now omits any mention of curb cuts or parking lots.  It only states a requirement for platform edges.

Note that ADA is only one of several sets of Federal standards on accessibility, and states and municipalities may have other requirements.

For more information, visit www.ada.gov or contact Chusid Associates.

What Would You Like to Say to Homebuilders?

The National Association of Home Builders' annual International Builders' Show (IBS), has put out a call for speakers at its 2013 edition in Las Vegas.  It is the largest residential construction industry show in the world.  


There are a range of different educational tracks for presentations, focusing on issues of the craft and business of residential construction.  It is a great opportunity to share your expertise and establish your presence with builders and designers in residential construction.  Deadline for submissions is Feb 24.  www.nahb.org

Use long-term cost benefits to your advantage

This is an encore presentation of an article Michael Chusid wrote about 20 years ago. It's message is still current.
 
I often encounter price resistance when selling my company’s top-of-the-line building products. Even though I explain that the product lasts longer and has lower operating costs, many customers can’t see past the initial costs. How can I overcome this sticker shock?—D. N. S. , sales manager

Developers and building owners think of their projects as an investment. In addition to construction costs, they analyze operating costs, potential income, and resale value. To overcome price resistance, present your product as an investment instead of an expense.

In some cases, this can be done by focusing on how your product adds value to a building. Developers recognize this principle when they spend extra on building finishes or fashionable interiors. Their investment is repaid by making it easier to sell the property or attract higher rental income.

Other products can be positioned as expenses necessary to protect a property’s income potential. A major hotel chain, for example, invests in backup air-conditioning equipment because they realize their inventory of rooms is worthless if they can’t guarantee comfort.

Tout up-front savings
Another approach is to emphasize the “first cost” of your product. In addition to purchase price, this includes the design, construction, and financing costs necessary to put your product into service. You can sell the first-cost benefits of your product if, for example, it costs less to install or enables faster completion of a project.

A still broader view of costs is a lifecycle cost analysis, which considers the cost of owning a product, not just purchasing it. This is significant because the total of a building’s maintenance, energy, insurance, tax, interest, and other ownership expenses usually exceed construction costs.

Life-cycle affordability is key
Life-cycle cost analysis has long been used by mechanical engineers; it is fairly simple to compare the cost of additional insulation or more-efficient equipment to projected energy savings. But in recent years, life-cycle affordability has become increasingly important. Environmental concerns, for example, have shifted attention from construction costs to issues such as energy consumption and building materials disposal. Institutions like the Army Corps of Engineers have begun to require life-cycle cost analyses of proposed projects. A recent publication from the American Society for Testing and Materials, ASTM Standards on Building Economics, establishes procedures for investigating the life-cycle costs of building materials. And computer programs have simplified the extensive number crunching required for life-cycle cost calculations.

Many manufacturers claim life-cycle benefits in their advertising, using bar charts to show how their products’ costs compare to competitors. Such claims have more impact if your customers can examine the supporting data. You can use computerized presentations to show them results for a specific product.

USG Interiors is one company that uses computerized life-cycle cost analyses to position its relocatable office partitions against lower priced conventional drywall partitions. The program considers such variables as the client’s tax bracket, material and labor costs, project size and complexity, mortgage terms, and the accelerated depreciation allowed to relocatable partitions. It also asks the customer how often remodeling will occur. The program then compares the life-cycle benefit of USG’s reusable partitions with the demolition costs of removing drywall partitions. This gives USG a powerful sales tool to use with financially oriented customers who may not perceive the product’s technical or aesthetic benefits. In addition, getting the customer to say yes to all the input data increases his acceptance of the program’s conclusions.

From a life-cycle cost analysis prepared by Chusid Associates.

Are your products priced right?
Conducting a life-cycle cost analysis for your product can be a fruitful marketing exercise. For example, do you know what factors most affect the affordability of your product and your competitors’ products? Can you substantiate product durability or quantify maintenance costs? Would your products be more affordable if there were more demand for salvaged or recycled components?

A life-cycle cost investigation I once conducted for a water-conserving plumbing system helped the manufacturer establish a competitive price for its product. Another time I compared the life-cycle costs of 12 roofing systems. Even though my client’s roofing system had outstanding durability, the study showed its high initial cost was not offset by low life-cycle maintenance costs. This insight helped clarify the manufacturer’s marketing alternatives.

While life-cycle costs can be an important sales tool, you must still tailor your presentation to each individual customer. Many price objections are simple requests for more information or reassurances. Other objections may be based on unquantifiable concerns about performance, appearance, or reliability. Bringing out a technical looking spreadsheet could confuse some customers or miss their main concerns.

For some customers, delivering a job for the lowest initial cost will always outweigh life-cycle considerations. But in other cases, a life-cycle cost argument may be just what is needed to close a sale. It can help customers justify to themselves or to their clients the decision to use a more expensive product. Or it can be a subtle way of pointing out a competitor’s shortcomings. Most importantly, it can change the focus of a sales presentation from the cost of your product to the value of your product.


Have a question you'd like us to answer?
Send an email to michaelchusid@chusid.com 

By Michael Chusid. Originally published in Construction Marketing Today, Copyright © 1994

The Market for Renovating Existing Buildings

The construction industry is too big to capture all at once, so successful building product marketeers look for segments that they can penetrate and dominate. The market for renovating existing buildings is often overlooked by many building product manufacturers. Maybe they are under the illusion that market for historic buildings is only for firms that make reproductions of antique materials. There is a place for period piece manufacturers, but the biggest challenge in rehabbing old buildings is to integrate NEW materials and technologies into the existing structure. Early in my architectural career, for example, I got to remodel the Manitowoc, Wisconsin court house (http://upload.wikimedia.org/wikipedia/commons/7/79/ManitowocCountyCourtHouse2006.jpg). While some locations in the building required specialists to recreate or repair historic materials, most of our challenges were to find new materials that could tie into existing materials -- physically and aesthetically.  

I am reminded about this while reading a summary of the market posted by Restore Media, publishers Traditional Buildings and other media focusing on the existing building sector. It is reprinted below with permission.

Traditional building is an estimated $170 billion market, including both residential and non-residential historic restoration, renovation and new construction in historical styles. The market’s professionals—contractors, building owners, facility managers, developers, planners, preservationists, architects, custom builders, interior designers and tradesmen—buy and specify an estimated $50 billion of building materials per year.

As of this year, 2010, just under 30% of the U.S. housing stock is more than 55 years old. Likewise, about 25% of the commercial, institutional and public buildings are now 55 years old or older. From 1995 to 2010, old buildings, as a percentage of total building inventory, have grown by 8.2%. Add to this the old buildings built between 1953 and 1972, and the old building inventory swells to nearly 53% of the U.S. total building inventory.

Traditional building is defined as the restoration, renovation, maintenance and preservation of historic buildings, architecturally important buildings or both. It includes the new construction of period-style or contextual additions and buildings, such as “new old" houses, traditional neighborhood developments, commercial/ institutional infill and adaptive reuse. For a glossary of traditional building terms, see below.

Old houses, schools, churches, hotels, house museums, retail and office buildings, as well as public buildings like historic post offices, courthouses and state capitals, are part of the $170 billion traditional building market if they are historically and architecturally significant and in need of expansion or repair. 

WHAT DEFINES A HISTORICALLY SIGNIFICANT BUILDING?

• The integrity of the location, design, setting, materials, workmanship, feeling and association.
• A building that is an excellent example of a style, period, or method of construction.
• A site where a historical event occurred or an important person lived or worked.
• A structure that represents a turning point in architectural design, planning or technology.
• A site that has yielded or is likely to yield important historical information.

(Source: "AIA Guide to Historic Preservation 2001")


THE GROWTH OF THE TRADITIONAL BUILDING MARKET IS DRIVEN BY SEVERAL TRENDS




An aging building stock: by the end of 2010, 28% of America’s housing inventory will be 56 years old or older; 52% will be 35 years old and getting older. There are over 41 million houses in this age bracket.

The federal government manages 430,000 buildings, most of which are historic. (Source: "Carying for the Past, Managing for the Future: Federal Stewardship and America's Historic Legacy")
 
There are 14,000 historic districts.

There are 24,000 schools built before 1951, most or all within walking distance of older neighborhoods. (Source: U.S. Department of Education)
 
Changes in federal funding programs have strengthened historic preservation’s connection to urban planning and community development. For example, since 1992, $10.4 billion has been apportioned for transportation enhancement programs with a major traditional building component. (Source: "Transportation Enhancement Activities: Appointments for FY 1992-2008," U.S. Department of Transportation)
 
Public transportation is available to 60% of older, established and historic neighborhoods compared with 75% of new housing that has no access to public transportation.





The cost of fuel and resulting government emphasis on public transportation, infrastructure, urban revitalization and context-sensitive design have reversed the tide of suburban flight. For example, there are now more residential housing units on Wall Street than there are offices.

According to the Urban Land Institute, by the year 2050 the U.S. urban population will grow by 300 million people.

According to the Metropolitan Institute, there will be 55,000 multi-housing units built in the next 40 years, much of this from the adaptive reuse of historic buildings on commercial and transportation corridors.
According to the Department of Energy, there will be twice as much commercial and institutional renovation than new construction in the next 20 years.

The Department of Interior approves federal historic tax credits for approximately $3.5 billion in historic restoration and renovation per year. In 2006 alone, federal tax credit projects jumped 15% to 1,253.

As of 2008, 29 states were offering additional state historic tax credits to encourage the rehabilitation of historic buildings. Of these, 23 states offer a tax credit to homeowners. (Source: The National Trust for Historic Preservation)
 
The National Main Street Center has rehabbed over 180,000 historic buildings on main streets across America. (Source: National Main Street Center)

Despite declining real estate values in 2007-2008, price appreciation for older buildings in close-in neighborhoods has held steady or increased.


The construction of buildings accounts for nearly 50% of new greenhouse gas emissions. Building demolition accounts for 75% of landfills. There is a shift away from new to 'renew", from new construction to restoration, renovation and adaptive reuse.(Source: “Trends in Building Related Energy and Carbon Emissions: Actual and Alternate Scenarios,” Energy Information Administration)
 
By 2007 22 states, 55 cities, 11 counties, 8 towns and 11 federal agencies had adopted green building initiatives. Governors in 25 states have adopted climate action plans with 14 more now developing plans. In Arlington Virginia, for example, municipal buildings must be LEED rated, by law. (Source: USGBC) 
 
The U.S. Green Building Council recently approved LEED points for the “embodied energy” in existing buildings. This will make tear-down and re-build projects less likely in the future. It will drive the growth of “greening” existing and historic buildings, already well underway in Portland, Chicago and Washington, D.C.

WHO DOES THE TRADITIONAL BUILDING WORK?
The professionals who work on traditional buildings have unique information needs and interests based on the special challenges and, in some cases, government regulations that historic buildings require. Extensive research is always required before breaking ground. At the very least, designing and building to fit an existing neighborhood or vernacular tradition require an aesthetic sensitivity to classical architecture: the right scale, proportions and materials. In a complex historic restoration and renovation, professionals are challenged by a whole range of issues, from restoring or replicating historic products, to meeting Department of Interior (National Park Service) federal tax credit standards.


TRADITIONAL BUILDING ARCHITECT PROFILE
Architects play a very important role in traditional building, both on high end residential period homes and historic commercial/institutional/public work.

The traditional building architecture firm:

• does a yearly construction volume of $10,960,000 (average size firm);
• has an average 18 employees;
• operates in a local/regional market but because of its specialized historic work, also serves clients nationally and internationally;
• relies on commercial/public and institutional historic restoration, renovation and traditional-style new construction as significant parts of its work; and
• breaks out into large firms (20 architects or more on staff) that typically do commercial/public/institutional work only and small to medium-size firms that do high-end residential and light commercial work.

According to the AIA, 30% of all architect billings are from government work.
(Source: "AIA Firm Survey; Traditional Building Audience Research 2008")

TRADITIONAL BUILDING CONTRACTOR PROFILE The general contractor, restoration/renovation contractor and custom (period-style) builder play an important role in traditional building The traditional building contractor: is a firm with a yearly construction volume of $7,780,000 (average size firm); builds for an average $300 or higher per construction foot; has an average of 10 employees; operates in a local/regional market but will follow local clients to national and international destinations; and relies on traditional building as a significant part of its work. Very large firms ($50 million or more) typically do commercial/public/institutional work only, while small to medium-size firms do high-end residential and light commercial projects. (Source: Traditional Building and Period Homes Audience Research 2008)

WHAT ARCHITECTS AND CONTRACTORS WANT FROM SUPPLIERS

• Quality products and service
• Availability; short, and/or predictable lead times
• A great website that addresses the professional’s needs and interests
• Product brochures to share with clients
• Technical support, accessed via an 800 number
• Personal service offering solutions to problems
• Market segment expertise
• Continuing education credits
• Shared risk and call-back resolution
• Design flexibility
• Period-accurate and authentic products
• Options and choices presented in a good/ better/ best scenario
• Comparative analysis vs. other product brands/competitors
• Proven but unique products
• Green products that last a long time and can be repaired

(Source: Restore Media, LLC, Audience Research, 2008)


FACTORS INFLUENCING PURCHASE DECISIONS
(order of importance but varies by product type and project demands)

• Quality
• Durability
• Historical accuracy
• Ability to match custom specs
• Availability/lead time
• Manufacturer reputation/dependability
• Green attributes
• Low maintenance
• Customer service and support
• Ease of installation
• Price
• Terms

(Source: Restore Media, LLC, Audience Research 2008)


PRESERVATION BENEFITS
The greatest benefit of historic preservation is the protection and interpretation of our cultural heritage. Buildings are a true record of the period or society that created them. They are a primary source of historical information. The historic and social value of preserving older neighborhoods, restoring a landmark county courthouse or adaptive use of railroad stations or other underutilized buildings across the country far exceeds the direct economic benefits. Preservation makes a significant contribution to the beauty and enjoyment of our cities, towns and rural landscapes and to the quality of life in these special places.

At the same time, the economic benefits of preservation are not inconsequential. Solid documentation exists regarding benefits to the tax base of communities and stimulation of the economy.

Both public and private owners have come to realize the economic benefits of preservation. Savings in costs, materials and energy in the adaptive use or preservation of existing buildings are significant. In adaptive-reuse projects, the cost per square foot can be substantially less than that for new construction. In addition, both energy and natural resources can be saved by re-using existing structures rather than constructing buildings using new manufactured materials delivered to the jobsite.









Owners of buildings that are recognized historic landmarks or are located in designated historic districts may qualify for other financial benefits. Federal tax laws and Internal Revenue Service regulations provide tax credits for the restoration of commercial buildings listed in the National Register of Historic Places. State and local grants and special tax deductions may also be available.

(Source: "The American Institute of Architects Guide to Historic Preservation")

INFILL AND NEW URBANISM BENEFITS
The Congress for the New Urbanism (CNU) views disinvestment in central cities, the spread of placeless sprawl, increasing separation by race and income, environmental deterioration, loss of agricultural lands and wilderness and the erosion of society’s built heritage as one set of interrelated community-building challenges.

CNU advocates the restoration of existing urban centers and towns within coherent metropolitan regions, the reconfiguration of sprawling suburbs into communities of real neighborhoods and diverse districts, the conservation of natural environments and the preservation of our built legacy.

Physical solutions by themselves will not solve social and economic problems, but neither can economic vitality, community stability, and environmental health be sustained without a coherent and supportive physical framework.

(Source: Congress for New Urbanism Charter 2001)

GLOSSARY OF TRADITIONAL BUILDING TERMS
Preservation: applying the measures necessary to sustain the existing form, integrity and materials of a historic property. Preservation work generally focuses on the ongoing maintenance and repair of historic fabric rather than extensive replacement or new construction.

Rehabilitation: adapting a property for continuing or new compatible use through repair, alteration and additions, while preserving those portions or features that convey its historical, cultural or architectural values.


Restoration: accurately depicting the form, materials, features and character of a property as it appeared at a particular period of time. Restoration retains as much of the historic period fabric as possible. Inconsistent features may need to be removed and missing features faithfully reconstructed in accordance with the restoration period.

Reconstruction: depicting by means of new construction the form, materials, features and character of a historic property that no longer exists, as it appeared at a particular period of time, in its historic location.

(Source: "The American Institute of Architects Guide to Historic Preservation")

GOOD RESOURCES
AIA Historic Resources Committee (HRC)
www.aia.org/hrc
American Institute of Building Design (AIBD)
www.aibd.org
Association for Preservation Technology Intl. (APTI)
www.apti.org
Congress for the New Urbanism
www.cnu.org
Institute of Classical Architecture & Classical America (ICA CA)
www.classicist.org
International Network Traditional Building, Architecture and Urbanism (INTBAU)
www.intbau.org
National Town Builders Association
www.ntba.net
The National Trust for Historic Preservation
www.nthp.org
New Urban Guild (NUG)
www.newurbanguild.com
Preservation Action
www.preservationaction.org
Preservation Education Institute (PEI)
www.preservationworks.org
Preservation Trades Network (PTN)
www.iptw.org
The Urban Land Institute
www.uli.org 

Residential Remodelling Bottom?

WASHINGTON, May 6, 2010 – The level of remodeling activity nationally reached a bottom in the first quarter of this year, according to the latest release of the Residential Remodeling Index (RRI) by Hanley Wood. The seasonally adjusted first quarter national composite of the RRI declined less than 0.2% from the last quarter of 2009. The RRI forecasts a 1% increase in the second quarter of 2010, the first quarter-over-quarter improvement in two years.

While the second quarter 2010 forecast still represents a 2% decline year-over-year, Hanley Wood forecasts continued acceleration of remodeling activity through the end of 2010 and into the beginning of 2011. That growth would rival the growth experienced in 2005 and early 2006.

"Our new forecast for remodeling represents a substantial change from our view at the beginning of the year," said Jonathan Smoke, Hanley Wood's Senior Vice President of Market Intelligence Products & Innovation and the architect of the RRI. "At the beginning of the year, we didn't see conditions improving until 2011. But in the first quarter we've seen an uptick in activity in many markets and as a result, it appears the industry has seen the bottom of this downturn."

"Not all markets are rebounding," says Smoke, noting that while several MSA's are above the RRI's baseline 100 level, some still measure below 50, indicating that they have less than half the volume of projects compared with 2007. "Remodelers in Washington, DC, the MSA with the highest RRI score in the first quarter, are in a much better position than those in Akron, OH, which had one of the lowest scores," Smoke said.

The RRI confirms anecdotal evidence of increasing remodeling activity. "We are hearing good news in several markets, particularly around products and projects that can capture tax credits and stimulus funded incentives," said Rick Strachan, Hanley Wood's Executive Director Residential Remodeling.

About the Residential Remodeling Index
The RRI is a quarterly measure of the level of remodeling activity in 366 metropolitan statistical areas (MSA) in the U.S., with the national composite reflecting the national level of activity. "Activity" includes home improvement and replacement projects, but does not include maintenance or projects of less than $500. The seasonally adjusted index shows the relative level of activity in the geography specified (MSA or national composite) compared to 2007 (the baseline year). A number above 100 indicates a level of remodeling activity higher than the level of activity at the beginning of 2007, which was the peak of remodeling activity in the prior decade. The index is produced through a statistical model that leverages detailed data on remodeling activity, including household level remodeling permits, and consumer reported remodeling and replacement projects. Quarterly historical results for the national composite and for each of the 366 Metropolitan Statistical Areas in the U.S. are available back to 2004.

From Hanley Wood