Home Remodelers Continue to Hammer Away
Matt Hennie, Contributing Writer
Friday, May 30, 2008
Warner McConaughey wonders when it all might end.
Despite sagging consumer confidence, a weakening economy and a housing industry in turmoil, the home remodeler said business remains strong. In fact, he’s added staff over the last year to HammerSmith Inc., a Decatur-based design and renovation firm he started in 1991.
“Every day I wonder and read things and wonder what is coming, but so far we’ve managed to stay at full capacity,” McConaughey said. “But the climate feels different and the clients are very cautious right now.”
Clients are more involved in the planning and design of their home renovation projects than in the past, but the work keeps coming in. Last February, McConaughey said the firm decided it could downsize and ride out the economic slowdown or tweak its business model by focusing on employees and hiring strategically.
“We had a decent pipeline of activity and we decided it was better to ramp up and that would be a better way to handle it, rather than cut back and get rid of our infrastructure,” he said.
Over the course of a year, HammerSmith hired a project manager and a carpenter and added another employee to its service department to pursue smaller jobs with previous clients that range from a few hundred dollars up to about $1,000. The company also brought more carpentry in-house to boost quality control and avoid costly reworking of subcontractor mistakes.
But not all metro Atlanta remodeling companies are faring so well, said Rocco Sinisgalli, the chairman of the Greater Atlanta Remodelers Council of the Greater Atlanta Home Builders Association. He points to smaller firms including his, Dunwoody-based Oneida Builders Inc., which laid off three of its 10 employees earlier this year, and larger outfits. SawHorse Inc., the city’s fifth-largest residential remodeling contractor, has shrunk to five employees from 25 and is struggling to remain open.
“What we are focusing on is more efficiency, reviewing people’s job descriptions and holding people in the company and more subcontractors accountable,” Sinisgalli said. “You don’t need a huge firm. There is always enough work for the smaller people. The bigger people are the ones that are getting hurt.”
The size of the remodeling projects has remained steady, he said, although customers are less willing than in the past to incur budget overruns and last-minute splurges “for all of the bells and whistles.”
Additionally, some of the council’s 114 members are feeling the pinch of home builders turning to renovation projects as new construction slows.
“Home builders have definitely picked up some remodeling work where before they wouldn’t touch it,” Sinisgalli said.
Mark Buelow, who started Roswell-based Distinct Remodeling Solutions Inc., in 2001, said he’s increasingly bidding against home builders who are encroaching into remodeling, but that overall, business for his eight-person firm remains on par to match results from last year.
Customers, though, are spending more time researching renovation companies, asking more questions of contractors and more tightly overseeing the project’s budget, he said.
“People are a little more sensitive to managing the budgets,” Buelow said. “On the same token, people are still reaching to do the things they want to do. They realize the opportunity to do it is now.”
Kara O’Brien, a co-owner of Kara O’ Brien Renovations in Kirkwood, said the firm remains busy, but the scope of projects is changing from large-scale renovations to more targeted projects focusing on kitchens or bathrooms.
“People are not jumping around as much as they were,” O’Brien said. “They are nesting. They are settling in and want to make it a fantastic kitchen. People are just kind of staying put and deciding that if they are going to stay, they are going to enjoy their space and upgrade it.”
Updating and expanding kitchens and bathrooms brings a high return on investment, O’Brien said, but homeowners should also consider increasing value by adding usable space through storage, custom built-ins and outdoor space. Luxury items — heated floors and towel racks, the addition of marble and frameless glass shower doors — also set homes apart for resale, she said.
“That is the kind of emotion that sells houses. It is nice to have it and enjoy it and it is nice to use that emotion when you want to get someone to buy the house,” O’Brien said.
Buelow said even in tough economic times, the home remodeling industry benefits from lifestyle changes that prompt a need for renovations regardless of market conditions. Having an elderly parent move in or the arrival of a child creates opportunities for his business.
“The economy is not going to impact those as much because they are happening regardless of the economy. People are still pursuing those things in lieu of what the market conditions might be doing,” he said.
© 2008 American City Business Journals Inc.
