New commercial pool construction saved a lot of jobs during the recession. Growth remains steady through 2017.
Ten years ago, during the depths of the recession when the housing cave-in was dragging down a lot of residential pool builders, things were comparatively flush within the commercial segment. True, business was down everywhere including the commercial segment, especially within the hotel and government categories.
But as we’ll see, the downturn wasn’t as severe, and the recovery was much faster.
Last in, first out
As we have pointed out before, residential pool construction took a huge hit during the recession, losing some 74% of its retail value in the years 2006-2009. Commercial pool construction was down, too – but average annual losses were less than half that on the residential side.
Percent change in new unit construction, commercial versus residential pools, 2008-2017. Source: Pkdata research.
Moreover, it took longer for the real effects of the economic downturn to be noticed on the commercial side because lead times associated with public pools are usually longer owing to the bid process that is frequently required. And even though the residential sector began its recovery a year earlier than the commercial business, it had a lot more ground to make up.
Hotels lead the way
The recovery in commercial pools has been largely driven by the private sector, mainly lodging and multi-family construction.
Percent share of new commercial pool construction by segment, 2008-2017.
Source: Pkdata research.
The chart above, not to be confused with a post-Impressionist painting, depicts the relative share of commercial pool construction within the seven segments tracked by Pkdata. In 2017, hotels, motels, resorts, apartments and condominiums accounted for nearly two-thirds of new public pools, according to Pkdata’s latest commercial pool market report just released. To demonstrate the importance of the lodging market, note how the commercial pool business brief downturn in 2013 was led by a correction in hotel construction.
Two key factors influencing commercial pool growth are population and tourism, and California leads in both according to census and US Travel Association data. In fact, it is probably fair to speculate that the Golden State has led commercial pool development pretty much from the beginning with Florida never far behind.
Share of new commercial pool construction (units) by state, 2017. Source: Pkdata research.
Eight states comprised over half of all new public pools built in 2017, led by the same four states that perennially lead new residential construction – California, Florida, Texas and Arizona.
There is much to be said for the commercial pool segment. While new public pool units were only 5% of new residential pools in 2017, the average contract price is much bigger, owing to comparative size as well as the related amenities and supporting equipment. Moreover, there is a vibrant aftermarket for replacement parts and renovation (commercial pools tend to be around longer), and the commercial service sector is strong and growing.
And from the looks of it, the commercial sector appears to endure recessions somewhat better.