As the commercial flooring market evolves, the drive toward innovative and sustainable hard surface solutions is shaping the industry’s future, offering diverse options to meet growing demands of various sectors.
“There is continued growth of resilient products as there is a lot of remodeling going on, with spaces switching out from commercial carpet and other products,” Yon Hinkle, AHF Products’ vice president of product management – resilient, observed. “We have developed innovative, PVC-free products, such as MedinPure, a homogeneous sheet floor free of plasticizers, orthophthalates, halogens, isocyanates and Red List Chemicals of Concern, to give customers true choice in their flooring needs.”
Front and center for this work is specified contract, which is pacing to maintain a substantial 70% share of the estimated $7.3 billion commercial flooring market this year, with Main Street applications accounting for the remaining share, according to FCNews preliminary research. However, the first quarter got off to a rocky start, as growth was hindered by high inflation, economic uncertainty and increased construction costs. These issues reportedly caused delays and cancellations of new commercial projects in certain regions of the country.
Entering May, however, economic conditions started to improve and is expected to carry over the remainder of the year. For example, leading economists project lending rates, which soared to a 23-year high of nearly 8% last October, are projected to decline. In April, the unemployment rate remained steady at 3.9% but 175,000 jobs were added, according to the Bureau of Labor Statistics. Significant job gains in healthcare (56,000) and retail (20,000), two key markets for commercial flooring, also contribute to the optimistic outlook.
With economic indicators pointing in the right direction, industry members expect specified contract work to flourish, although macroeconomic challenges within key market segments could influence growth rates and flooring choices. “There are a lot of dollars flowing into the specified space and pent-up demand from projects that were delayed by 12 to 18 months or put off during the pandemic,” Hinkle pointed out. “I think that, along with an additional cash influx, will make for a healthy year for specified contract.”
Hard surfaces expand share
Once again, hard surfaces are outgaining carpet and projected to post a mid to high single-digital sales hike over 2023, observers project. Many floors make up the category, including resilient, ceramic tile, hardwood, laminates and polished concrete, with market share and growth rates varying by end use and region. An estimated 60% of hard surface sales are from specified contract while volume is nearly even with Main Street applications.
Leading the charge is resilient, as products such as sheet goods, LVT, rigid core, linoleum and VCT represent approximately 55% of commercial hard surface sales and over 30% of total commercial market revenue, FCNews preliminary research shows. “We will continue to see more design and development in resilient,” noted Zack Adamson, vice president of Engineered Floors’ commercial division. “Wood-inspired looks will continue to have the lion’s share of the market, but look for more stone, terrazzo, textile and abstract-inspired looks to fight for the balance of the market.”
While LVT is the headliner, making inroads across all major end-use segments, VCT is experiencing a renaissance dating back to last year. The resurgence is attributed, in part, to LVT being oversold in certain commercial spaces. “Specifiers have come back to VCT based on the performance story and longevity,” AHF Products’ Hinkle said. He cited the ongoing demand for Armstrong Flooring VCT products as well as the acceptance of newer launches such as AHF Contract’s Iliad VCT.
Jeff Galloway, Mohawk’s vice president of product management, said LVT has seen a lot of growth in the commercial market in the last decade. However, he sees demand slowing a little as the market reaches equilibrium. “Homogeneous sheet and solid vinyl tile continue to see growth due to the markets they serve,” he noted.
Ceramic tile remains a strong contender in the hard surfaces category, boasting a 16% market share with sales expected to grow around 5% this year, FCNews preliminary research shows. New surface treatments and finishes are said to improve scratch and abrasion resistance, making tile more suitable for high-traffic areas. “Advanced manufacturing techniques, such as pressing and firing at higher temperatures, have resulted in denser and more durable tiles,” Rocamador Rubio, director, Trade Commission of Spain for the USA, pointed out.
Meanwhile, soft surfaces are projected to post modest gains year over year. Carpet tile remains the top choice, commanding over 60% market share while broadloom remains a viable option primarily for hospitality and retail applications. “Carpet tile remains the carpet of choice for commercial environments,” said Daniel Collins, Shaw Industries’ vice president of commercial soft surface and innovation. “Broadloom is used strategically in spaces requiring elevated design with large patterns and higher ounce weights, or in environments where a seamless look is desired with smaller or no pattern.”
An estimated two-thirds of commercial carpet sales come from specified contract, with volume virtually split with Main Street work. In recent years, Main Street has gone mainstream for scores of flooring retailers who see value in diversifying their portfolio to balance out their residential offerings. It’s all about providing a buffer when some segments of the market show softening.
High vacancies impact offices
The COVID-19 pandemic triggered a seismic shift in market share among the major commercial sectors, but all five showed signs of recovery last year, observers noted. “The biggest opportunities for flooring contractors lie in the education and healthcare segments,” said Geoff Gordon, executive director, Fuse Alliance. “Business in both these areas is still strong and we see no let-up in bidding and job awards.”
Corporate/offices was among the hardest hit segments, as its share of commercial flooring sales shrunk from roughly 40% in 2019 to approximately 21% in 2022 largely due to reduced office space and high number of employees working remotely. Case in point: Office vacancy rates reached a record high of 19.8% in the first quarter and is beating two historic peaks of 19.3% in 1986 and 1991, Moody’s reports. “The normalization of hybrid working arrangements will continue to limit the growth of office demand,” Trade Commission of Spain’s Rubio said. “As more companies adopt flexible work policies, the need for traditional office space may decrease, impacting the commercial real estate sector.”
Carpet tile, LVT, engineered hardwood, porcelain tile and polished concrete are among the options being specified to create spaces that promote collaboration, flexibility and well-being. Shaw reports increased demand from the corporate sector for high-end carpet products used in conjunction with hard surfaces. “These clients are willing to spend more for high-design styles that are both durable and have sustainable attributes,” Collins said. “They want a product that performs and looks good for a long time.”
Aging cohort lifts healthcare
Healthcare, meanwhile, came out of the pandemic as one of the fastest growing commercial segments, and that momentum continued into 2024. An aging population is driving the flurry of new construction and renovation work involving assisted-living facilities, clinics and urgent care centers. “Healthcare continues to grow as the population ages,” AHF Products’ Hinkle said. “Not all of that work is specified; you see it locally, such as new medical facilities, which specialize in areas such as memory care.”
To that end, facility managers and designers are reinventing the look and feel of healthcare spaces to enhance patient experiences. Interior design aligns with strategies merging virtual and in-person care delivery while incorporating home-like elements into various spaces.
“The steady expansion of major healthcare systems signals a growing demand for innovative flooring solutions like Karndean LVT, which offers both aesthetic appeal and crucial hygienic properties,” noted Joe Michalik, Eastern regional commercial sales manager, Karndean Designflooring.
Floor design is tricky as the A&D community must balance fashion and function across different areas. Resilient flooring is among the top sellers, especially in areas requiring high sanitary levels, such as emergency rooms, triage departments and treatment rooms. “Homogeneous sheet vinyl products continue to grow,” said Brian Carson, AHF Products’ president and CEO. “We’re seeing strong demand in healthcare, which is driving growth in our Medintone and Natralis commercial sheet collections as well as in our LVT.”
Ceramic tile and linoleum are considered healthy choices and ideal for public spaces within healthcare facilities while carpet tile is utilized primarily in patient rooms, waiting areas and offices. “Clients are installing carpet tile, LVT and nora rubber flooring throughout healthcare environments based on space-specific needs,” said Jim Poppens, chief commercial officer, Interface.
Hospitality rebounds
Hospitality businesses are making a robust recovery from the impacts of the pandemic. The sector is seeing restaurants, travel and tourism, lodging and recreation businesses return to pre-COVID-19 levels. “Hospitality continues to be the fastest growing segment,” Mohawk’s Galloway said.
Engineered Floors’ Adamson concurred. “Hospitality has been encouraging, as both business and leisure travel have increased.”
The healthcare and hospitality industries share similarities, particularly in their investments in remodeling to attract customers while providing compelling experiences. “Massive demand is driven by demographic changes and the need for traditional hospitality spaces to upgrade,” said Mark Bischoff, president and CEO, Starnet Commercial Flooring. “Hospitality brands at all price levels must offer a compelling experience as a clear alternative to compete with new disruptive entrants.”
Various soft and hard surfaces are being utilized in hospitality spaces, with choices largely determined by specific needs of each environment. An estimated 25% of commercial carpet sales are directed to this sector, with broadloom the predominant choice. Ceramic represents roughly 50% of commercial sales within hospitality and there is a growing trend of incorporating hardwood and natural material-like products.
“In the hospitality industry, the focus on creating welcoming, luxurious environments drives the adoption of premium LVT,” Karndean’s Michalik pointed out. “Its ability to withstand spills, stains and heavy use while maintaining a high-end look is particularly appealing for hotels and restaurants.”
LVT continues to make inroads within hospitality, where it is favored in spaces requiring aesthetic appeal and sound absorption qualities. “Some major chains were moving to LVT in guest rooms but are now returning to broadloom carpet,” Fuse Alliance’s Gordon observed. “Hospitality remains the largest segment for broadloom.”
Education spaces transformed
Like hospitality, education is undergoing a rapid transformation, driven by advancements in technology and generational influences. This evolution is evident in the building and design choices for educational settings, from classroom renovations to new school constructions. According to recent reports, these changes are creating blended, flexible spaces that empower students to take charge of their learning experiences.
“Higher education institutions are prioritizing the sustainability attributes of interior products to meet climate commitments,” Interface’s Poppens said. “Offering a wider range of carpet tile designs at accessible prices helps us meet our customers’ needs and drive increased carpet and LVT sales.”
Education accounts for an estimated 22% of the commercial market and projected to bolster market share, FCNews preliminary research found, as construction and renovation projects gain momentum with students returning to campuses. The K-12 segment holds the largest share, representing around 75% of these sales, with the remainder coming from higher education. The diversification in flooring specifications in K-12 is partly driven by government bonds and public funding for school construction and renovation.
Both segments require durable flooring materials that can endure heavy foot traffic, frequent cleaning and provide a safe environment for students. “The introduction of more PVC-free products is expected to capture market share from traditional LVT,” Fuse Alliance’s Gordon noted. “LVT has significantly impacted the education segment, although some school districts are reverting to VCT after negative experiences with LVT.”
Education is the second-largest commercial segment for carpet, with nearly one-third of sales. “Carpet tile remains the flooring of choice in classrooms because of its associated comfort for students and teachers, acoustics and ease of maintenance,” Shaw’s Collins reported.
Retail sector surge
As consumers eagerly returned to a semblance of normalcy two years after the height of the COVID-19 pandemic, businesses are seizing the opportunity to revive the retail sector. Stores reopened and welcomed customers back. But getting people back to brick-and-mortar stores has been challenging, experts say, as consumers have more choices on where to shop.
U.S. brick-and-mortar retail sales totaled $7.07 billion in 2023 but lagged e-commerce sales growth by 75%, according to Capital One Shopping Research. A net 1,820 new store locations opened last year, down almost 71% from 2022. Compared to February 2023, revenue among physical stores was up 5.14%.
“The bulk of retail commerce continues to be outside online channels,” Starnet’s Bischoff said. “Online is the fastest growing, but the leaders are multichannel, strategically using physical experiences to reinforce the strength of their online presence.”
Like educational spaces, flooring choices run a wide gamut. For instance, high-end retail outlets often feature ceramic, wood and carpet, while resilient flooring is common in other public areas. Mass merchant and specialty retail stores often balance broadloom and carpet tile to meet specific design aesthetics.
“We are seeing activity across all products and all price points,” Mohawk’s Galloway said. “Smaller retailers are looking for more value options, higher end real estate properties are still doing good despite the overall low occupancy in the office market.”
As the retail sector adapts to changing interior design trends, the emphasis on versatile, durable and aesthetically pleasing flooring solutions will play a crucial role in attracting and retaining customers. “Evolving consumer preferences and the rise of e-commerce continue to reshape the retail landscape,” Trade Commission of Spain’s Rubio explained.
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