The commercial market experienced a year of mixed activity in 2024, with some sectors showing resilience while others struggled amid inflation-driven price hikes, shifting end-user demands and labor constraints. Those factors combined to push commercial flooring sales down slightly to approximately $7.019 billion in 2024, a decrease of 1.6% over the year prior.
Flooring sales within key commercial segments such as healthcare, education and hospitality were anywhere from flat to modest growth while corporate offices and retail spaces saw declines, FCNews research found.
Here’s how some of the key end-use market sectors performed:
Corporate challenges
One sector that continued to recover from the fallout of the COVID-19 pandemic is offices, which saw its share of commercial flooring sales hold steady at around 13%, FCNews research shows. But that’s down significantly from 40% in 2020. Office/corporate vacancy rates hovered around 20% in 2024, leeching into the 2025 first quarter. “Commercial flooring has been declining due to factors such as widespread work-from-home policies, the impact of automation and AI, high office rental costs and ongoing corporate down-sizing or rightsizing initiatives,” said Jeff Galloway, vice president, product management, Mohawk Group.
New office construction remains limited, with only 3.5 million square feet delivered in Q1 2025, the lowest in over a decade, according to statistics provided by Coldwell Banker Commercial. The data demonstrates how the office market continues to grapple with shifting workplace dynamics, as hybrid work models and economic uncertainty influence leasing activity and interior design choices. “Corporate was the largest and most challenged for growth in the past 12 months,” said Eric Ruppert, senior director of product marketing and category management, Engineered Floors.
While some businesses sought to downsize office footprints, others invested in high-quality, flexible spaces to attract employees back to in-person work. For example, premium office spaces in major cities are reportedly maintaining strong demand. Case in point: In New York City, the overall availability rate fell to 17.3%, the lowest in five years, and was fueled by strong demand for trophy properties, according to published reports.
“The focus on quality in top-tier office spaces presents an opportunity for our contractors specializing in high-spec materials covering central business districts,” said Mark Bischoff, president and CEO, Starnet Worldwide Commercial Flooring Partnership.
Carpet tile and LVT remain popular choices as businesses valued their value and versatility across multiple applications. “Carpet tile dominates due to its modularity and ease of replacement during remodels,” said Carrie Edwards Issac, vice president of marketing, Shaw Contract. “Hybrid work models have led to phased renovations, favoring tile.”
The shift toward hybrid workspaces is increasingly influencing flooring choices, with modular and adaptable designs allowing businesses to reconfigure spaces easily. Technological advancements, such as smart systems that monitor foot traffic, continue to gain traction as businesses seek ways to optimize maintenance and longevity.
“Innovation, sustainability and a renewed focus on healthy materials are reshaping commercial flooring in ways that align with broader design and construction trends,” said Rusty Joyce, Tarkett Commercial president.
Healthcare’s pulse
Not all segments are equally challenged. Healthcare maintained its pace as one of the fastest-growing commercial segments, capturing the largest market share (44%), according to FCNews research. Healthcare services demand maintained an upward trend in hiring since 2022. The sector added 62,000 jobs in May 2025, higher than the average monthly gain of 44,000 over the prior 12 months, the Bureau of Labor Statistics reported last year. “While some sectors are still navigating post-pandemic shifts, we’re seeing strong momentum in key verticals like education, healthcare and hospitality,” said Carrie Edwards Issac, vice president of marketing, Shaw Contract.
The healthcare industry in particular is coming off a year of rapid transformation, as economic pressures, aging populations and technological innovation reshaped operations across hospitals, clinics and long-term care facilities. These changes, observers said, had a marked impact on facility interior design, where infection control, durability and patient comfort took center stage.
“The healthcare sector is experiencing growth driven by an aging population, an increased focus on better health and advancements in technology,” Mohawk’s Galloway noted.
A major factor driving demand is continuing growth of medical office expansions. “The medical office building sector is growing rapidly, driven by demographics and dramatic increases in outpatient procedures and ambulatory care,” Starnet’s Bischoff said. “This indicates consistent demand for flooring in hospitals, clinics and medical office buildings.”
A key driver is the continued surge in outpatient care. With more procedures shifting away from hospitals to ambulatory care centers, design priorities evolved accordingly. Flexibility and speed of installation became critical, leading to a preference for modular flooring like LVT and carpet tile, which allows quick repairs and replacements without disrupting services, proponents said.
“Healthcare is the biggest segment for sheet vinyl,” Geoff Gordon, executive director, Fuse Commercial Flooring Alliance, noted. “But we continue to see LVT, ceramic tile and rubber.”
Increasingly, hospitals are seeking eco-friendly materials that align with green building initiatives. Recycled rubber, bio-based linoleum, and low-emission floors are reportedly gaining traction, as healthcare facilities strive to reduce their carbon footprints while improving indoor air quality. “Clients are demanding low-carbon, recyclable products,” Shaw’s Issac said. “Our EcoWorx Bio backing, RE[TURN] reclamation program and Cradle to Cradle certifications are central to meeting these expectations.”
Back to school
Education was the second-largest commercial flooring sector, accounting for 23% of commercial end-use activity in 2024, FCNews research shows. K-12 dominates education-related construction, accounting for roughly 75% of total sales, with higher education making up the remaining portion. “Education is another growing sector, influenced by K-12 population growth, aging infrastructure requiring updates, increased college enrollment and a rising demand for highly skilled employees,” Mohawk’s Galloway said.
And while some educational institutions remained committed to updating and refreshing their properties during slow times, challenges limited some opportunities last year. For example, many public schools operate under tight financial restrictions, making affordability a primary factor during remodeling. Further compounding matters are project delays, which can be par for the course. “The business didn’t die down from lack of projects on the specified side,” Catherine Del Vecchio, AHF’s vice president, marketing, observed. “Budgets didn’t get approved in time for the work to be done.”
Observers expect the tide to turn, however. Growth is projected in the segment, as construction and renovation projects accelerate. These projects require a diversified amount of soft and hard surfaces, especially at institutions that operate multiple facilities. “Institutional construction is likely to remain a steady but modest contributor to growth, with gains in healthcare and recreational projects balanced out by weaker spending on education buildings,” said Rocamador Rubio, director, Trade Commission of Spain.
As institutions prioritize longevity and performance, flooring manufacturers are innovating to provide solutions that support evolving design flexibility. Hard surfaces dominate the landscape, representing more than half of flooring sold to K-12 educational spaces. Carpet also plays a significant role, as schools are the second-largest commercial market for this material, research shows.
An increasing emphasis on sustainability is also affecting material choices. Schools are looking for “green” flooring solutions that meet environmental standards while reducing their carbon footprint, according to published reports. “Many commercial designers and architects, especially those seeking LEED certification or other green building certifications, prioritize sustainable materials that are manufactured using environmentally friendly practices that align with these standards,” Rubio observed.
As schools integrate more technology-driven learning, collaboration and movement within these spaces are front of mind with designers. For example, carpet tiles allow for easy reconfiguration of learning areas while hard surfaces such as LVT, ceramic, hardwood and polished concrete offer easier cleaning and longer lifespans. “We’re seeing porcelain tile find its way into common areas within education,” said Fred Reitz, senior vice president of commercial, AHF Products. “There are food court and shopping areas where almost all of those spaces have porcelain on the floor.”
That’s not to say that tile is without its own challenges in the commercial arena. “The tile industry continues to face supply chain vulnerabilities following global disruptions,” Trade Commission of Spain’s Rubio said. “Commercial projects are particularly affected by inconsistent material availability, shipping delay and volatile raw material costs.”
Hospitality shines
The hospitality industry, which includes subsectors such as arts, entertainment, recreation, accommodation and food services, continued its post-pandemic recovery, fueled by boosts in leisure travel, conferences and business meetings. “One macro issue that came out of COVID-19 is people are spending more money on travel,” said Yon Hinkle, AHF’s vice president of product management – resilient. “There’s been a redistribution of where people are spending their discretionary income and a lot of it is experiential.”
These shifts are significantly influencing interior design across hotels and resorts, particularly in flooring. With travelers prioritizing high-end experiences, establishments focus on creating welcoming spaces through premium materials.
FCNews research shows the hospitality segment maintains an estimated 13% share of commercial flooring sales, with carpet, hardwood and LVT widely adopted to enhance the ambiance of guest rooms and common areas. “Hospitality is the one market segment where 12-foot broadloom carpet is still popular,” Fuse Commercial Flooring Alliance’s Gordon observed.
Another factor falling in hospitality’s favor in 2024 was the emphasis on sustainability in product selection. As companies look to reduce their environmental footprint, flooring producers responded with environmentally friendly lines featuring cradle-to-cradle certifications, low VOC emissions and materials made from post-consumer waste.
“Specifiers and end users are asking smarter questions about materials, life-cycle impacts and indoor air quality,” Tarkett’s Joyce reports. “This shift is pushing the sector toward more transparent and health-conscious solutions, which benefits both manufacturers and the communities they serve.”
Retail remains resilient
Despite persistent inflation, U.S. consumers continued to spend in 2024. But like past presidential election years, consumers appeared to pull back slightly leading up to November. But right after that, analysts said, consumers reopened their pocketbooks. This phenomenon, observers note, was a reflection of the mood of the country leading up to November as opposed to any real diminished buying power. Yes, there were a fair share of retail closings last year, but there were segments of the retail sector that continued to invest in their stores last year. These ranged from major chains to independent boutiques. “Retail is growing, primarily because of the expansion of big box stores and franchises, alongside necessary updates to aging or out-of-date retail models,” Mohawk’s Galloway explained.
The increased foot traffic is giving industry members reason to believe the segment will bolster its low-single-digit stake in the commercial flooring business this year. To attract more customers, retailers are reportedly focused on creating distinctive and memorable shopping experiences. “We have not seen a retail super cycle in many years,” Starnet’s Bischoff said, “so the members are hoping that one of the big retail chains makes a design rebrand part of their long-term effort to compete with online sales.”
Outlook for remainder of year
While mitigating factors expect to continue impacting project timelines and costs, industry observers are taking a cautious view of the market. “The largest current impact to the commercial business is probably some of the economic uncertainty that’s out there,” said Hilary Frank, Dal-Tile’s vice president of commercial sales and business development. “That’s probably preventing some owners from pulling the trigger, whether inquiring on a new project, kicking off a contract for a new project or really getting things continuing to move.”
Another factor impacting commercial construction, especially flooring is the shortage of skilled construction workers and floor covering installers. “Field labor scarcity is beginning to pinch our membership as the competition for tradespeople across construction ramps up,” Starnet’s Bischoff stated. “Other industries are far ahead of commercial flooring in the recruiting game, so the costs in the field will inevitably rise.”
Financing for commercial flooring projects is also impacted by factors shaping the overall real estate market, namely interest rates. During the end of December, Freddie Mac reported the fixed rate for a 30-year fixed-rate mortgage averaged 6.85% compared to 6.61% at the same time in 2023. Six months later, mortgage rates are essentially the same. And during the most recent Federal Reserve meeting, directors appeared hesitant to lower interest rates any further than the moves they made in September last year.
That has left some segments in particular exposed. For example, the multifamily market— which some observers consider commercial—saw a significant decline as starts fell 25% to a rate of 355,000 in 2024, industry data show. There were approximately 1 million apartments under construction, the highest rate since 1973, which put a damper on this business. “Multifamily unit turns are down because interest rates have made it more challenging to buy a home,” Noah Fulton, vice president, business strategy, Karndean Designflooring, observed. “Acquisitions have been down because the cost of properties is inflated.”
Then there’s the elephant looming in the room—tariffs on imports ahead of the holiday selling season. According to the CNBC/NRF Retail Monitor, retail sales grew through May 2025, even though consumers slowed down on stocking up ahead of tariffs. Core sales, excluding restaurants, automobile dealers and gasoline stations, were up 0.23% month over month in May and 4.2% year over year. “Consumer fundamentals haven’t been damaged yet and a slowing-but-still-growing job market is supporting household priorities ahead of any meaningful price increases in the coming months,” said Matthew Shay, president and CEO of the National Retail Federation.
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