Problem & Solution
Problem Worth Solving
The population in Richmond is growing. With more people come the need for more apartments and stores, in other words, new construction. New construction needs skilled electricians that can wire everything
Premiere Electric’s focus is to meet the demands of the former Gardner and Miller customer base. Premiere Electric has established relationships with these companies and believes we will receive referral business from them over time. The company estimates that 80% of revenues will come from old Gardner and Miller clientele and 20% from new referrals and business. Though the former Gardner and Miller clientele will be important during the first year of business, Robin knows the future of the business is new referrals.
Market Size & Segments
Many factors are contributing to this projected building growth, notably regulation, demographics, inexpensive capital, a strengthening U.S. economy, and technology. Alternative delivery methods are helping to make projects viable where they otherwise would not be.
Labor shortages may Impede growth to some extent will be. According to the Bureau of Labor Statistics, employment rose in 43 states in October, while declining in seven states. Finding qualified workers to perform the work has become onerous. Immigrant labor from Central America has helped somewhat, but the need for more skilled craftsman—electricians, pipefitters, plumbers etc.—will not be filled through immigration. Labor shortages will begin to slow growth and create wage inflation.
COMMERCIAL CONSTRUCTION FORECAST
RETAIL STORES AND MALLS
Online sales continue to grow, and extreme discounters keep expanding. Major retail chains and deep-discount stores will lead construction growth in this sector, although there will be some significant activity among regional and national grocery, drugstore, and quick-service restaurants. Specialty stores in urban cores will also contribute to growth, as will e-commerce warehouses. Look for increased activity in store renovations as well. There is the potential for 9% construction growth in this sector in 2016. Retailers will continue to fret about a possible increase in the federal minimum wage and the strength in the overall U.S. economy, which could slow growth.
Commercial warehouse construction is being buoyed by regional distribution centers for major retailers and the positive effect of the Panama Canal expansion. The strong dollar and a weakened global are pushing up imports of cheaper goods into the U.S., driving up warehouse construction. We are looking at an 8-10% growth in this sector in 2016. A slowdown in the U.S. economy could be a drag on this sector, but not by much.
Multifamily housing remains the star performer in this recovery. The 20-34 age demographic (children of Baby Boomers) is growing. This age group is the typical renter. The untypical renter is the growing 55-64 demographic of empty nesters. These two age groups are pushing up demand for rental housing. They are demanding walkability and high-end amenities in a work-live-play environment.
A significant amount of capital is chasing the apartment sector, a trend that does not seem to be abating anytime soon. Deals can be financed at 3%, making them easy to justify, especially in light of the available fixed-income alternatives, which can’t come close to real estate.
Expect growth to remain torrid at 17-20% in 2016. Rental demand is on the rise and shows no signs of slowing down. Most markets cannot keep up with current demand, making this segment a star performer for 2016 and most likely beyond.
Demographics and the strengthening U.S. economy are helping to drive construction growth. As the economy strengthens, employment is increasing. After sitting on the sidelines for the past few years, businesses and developers are building new office space.
Millennials (age 18-34), who now outnumber Baby Boomers, are traveling more than other demographic groups, which is feeding hotel growth and remodeling. The strengthening economy is increasing discretionary income, helping the lodging and retail sectors. Millennials are impatient shoppers, making it imperative for retailers to invest in more robust order fulfillment systems and fast and excellent customer service. Retailers who ignore Baby Boomers do so at their own risk. Boomers have significant financial resources and are much more active and educated buyers than previous older generations.
Millennials are also of the age to move out of their parents’ homes. They’re looking for apartments in the urban core, but there is also a significant amount of mixed-use development occurring in the suburbs, particularly in transit-oriented developments. This is an indication that developers believe that Millennials choosing to defer marriage and families will embrace the suburban lifestyle—albeit in the context of mixed-use properties rather than what their parents opted for.
Baby Boomers and the Affordable Care Act are infusing life into what just a few years ago was a moribund healthcare construction sector. Emphasis will be placed on preventive care and wellness initiatives for younger Boomers, as well as more traditional acute care for the older demographic.
Inexpensive capital is flowing into urban-core areas, especially those with a strong presence in healthcare, education, and the life sciences. In general, areas with historically high rents are faring much better than areas that rise and fall with the economy. Lower rent areas are also seeing some growth, but it is more tepid than in the urban cores.
These are heady times for builders, and there is cause for optimism. While it is true that certain larger issues, such as industry labor shortages or another financial crisis emanating from China, could slow down growth, the way things look today, this train has miles to go before running out of steam.
There are quite a few electric contractors in Richmond: Above Code Electric, Frazier Electrical, H.O. Feild Electric company, Prism Industries and Langhorne Electric to name a few.
All of them advertise many years experience, training, and customers who trust them. Electrical contractors enter their customer’s home. They need to do excellent work as well as be able to be in someone’s house without danger of invading privacy.
Some try and stand out like Above Code Electric which focuses on electric fan installations, or Prism Industries which focuses on TV and television installations. Others like Frazier Electric and H.O. Feild Electric are general contractors but are not locals, they are are a couple towns over.
Then there are our direct competitors like Langhorne Electric who focuses on electrical wiring upgrading for residential and commercial buildings.
When Robin opted to start her own company and take matters into her own hands, this was just another step in her quest to deliver services to customers that were second to none. As a woman in the male-dominated electrician profession, it has always been Robin’s competitive edge that has pushed her ahead with customers and employers. Her focus on new electrical technology places her in a unique situation. Both her major competitors had sought her services when Gardner and Miller announced the company’s departure from the area. Her reputation for quality work and excellent customer skills could have landed her with a new employer and a bigger pay check. The Richmond tri-county area is booming with new commercial construction, including a new research park and airport. Robin’s technical skills in data retrieval and communication systems will be a valuable asset for a company to have in the next five years.
Keys to Success
Keys to Success
Premiere Electric’s keys to success include:
- Expedient and convenient electrical services.
- Growing and maintaining a referral network of customers.
- Focus expertise in data, communication and electrical installation and maintenance.
- Rapid order and delivery of electrical components.