Everyone listens to Dr. Charlie Hall, professor and Ellison Chair in International Horticulture, in the Department of Horticultural Sciences at Texas A&M University. And at his Cultivate’15 session, “The Future Value of the Landscape Services Sector,” attendees hung on his every word.
According to First Research, the output of the U.S. landscaping industry is forecasted to grow at a compounded rate of 4 percent through 2016, indicating steady growth in the long term. In the landscape sector, regional firms are rapidly scaling up to achieve the economies of scale necessary to compete with the very large firms.
Here are some of the points Hall made at the session where he projected his near-term forecast for the landscape sector:
With 1.1 million housing starts now, the net demand is 1.5 million, and economists project there will be 1.2 million by the end of the year. That means, construction is behind in demand, so it’s a seller’s market.
At the end of the economic boom in the 90s, housing starts were at 2 million per year. Fiscal policies were encouraging building but the outcome was overbuilding, which caused an economic downturn. Policies were put in place for lower income families to be able to afford; however, the financial sector didn’t do a lot of favors to the economy. It allowed lower income families to own their own homes, but the way they got those homes was not good.
There are not a lot of economists projecting demise, but 2018 will show corrections in the market, which will cause demographic impacts.
“We’ve been living in Lake Wobegon, where the children are smart, the women are strong, the men are good-looking, and the economy is high, but that’s not realistic,” Hall said.
More Building Means More Landscaping Services
Architectural billings are leading the increases in more commercial development, with minimal landscapes and maintenance, because very few commercial businesses maintain their own landscapes.
The demand for multifamily buildings was fostered by Generation Y because they can’t afford to buy houses but can afford apartments, and also are gentrifying to cities. But that trend is now going to flip to more single family houses. There are 11 million fewer Generation Xers than Generation Y, but the current building starts are not proportional to the generations.
Funding at universities is such that if you don’t get money from the state, grants and contracts increase tuition. That’s the next bubble that’s going to burst, because the value equation has gone down compared to the increase in tuition. Graduates are saddled with $1.2 trillion in debt, and they can’t afford to buy homes. Plus, they’re delaying marriage and having kids later, so they’re not needing single-family homes.
It’s important to hear the age breakdowns because every 20 years, the number of people correlates to the economic growth. Fewer people means less economic growth.
Millennials don’t know how to garden in the landscape because they didn’t grow up with their grandparents gardening. People who are 67 years of old and older have an average life expectancy of 79 years. This demographic segment is the largest single transfer of wealth, and because of the aging population of boomers, there is more demand for landscape services.
Here is the mindshare:
• 42 percent of people have ever planted trees or shrubs
• 25 percent of households have purchased landscape services of any sort
People want things that enhance the quality of their lives, and people afford the things they want. They’re not buying landscapes because we haven’t convinced them that they want landscapes. We haven’t captured the mindshare of the customer. We have to talk to them about the things that they want.
For example, U.S. pet expenditures – people ended up spending more on their pets ($60 million), despite the great economic downturn. People seek things that make them feel good during uncertainty.
Author and visionary Simon Sinek asks, “Why do you do what you do?”
People don’t buy what you make, they buy why you make it. People like buying things from people who they like.
Our industry needs to overcome our own why, and communicate to people why they should buy landscape services:
• Economic benefits
• Envrionmental benefits
• Well being benefits
The Benefits Of Plants Are Clear And Well-Defined
Every dollar invested in landscaping generates a $1.09 return. That compares to kitchen remodeling, which used to be 93 cents and went to 70 cents on the dollar. Landscaping is the only service that generates more than a dollar per dollar invested.
How to sell a house in five days – every person who came to look at a house commented on the landscape.
Patients who had plants in their hospital rooms during their stay were less likely to return to the hospital. They also had less stress and less pain meds than when they were exposed to essential oils.
One tree can produce enough oxygen for two people for one year. Green infrastructure helps us better utilize the benefits of natural resources.
For children with attention deficit hyperactive disorder (ADHD), it’s been shown that a 20-minute walk through a landscape does as much good as two pills of medication.
We need to start monetizing landscapes in a way that people will understand, and make them view landscaping and plants as a necessity, rather than a luxury.
To learn more, read “Economic, Environmental and Well-Being Benefits of Lifestyle Horticulture” by Charlie Hall and Alan Hodges, or visit the Texas A&M Ellison Chair in International Horticulture.