Most industries have seen their business activity impacted one way or the other by the pandemic, and lighting retrofitting is no exception. At the start of another year — one that’s likely to bring some of the same constraints and opportunities — we wanted to look forward by hearing from some of the industry’s leaders.
We spoke with David Errigo of Acuity, Brad Picht of Graybar, Gary Pellant of Building Resources and Tim Unruh of NAESCO about the trends from 2020 they believe will continue, and their predictions for 2021.
The slowdown in retrofit projects is likely to continue through most of 2021, especially for certain segments. As Pellant notes, “2020 taught us that the way we use our buildings can change rapidly.”
In office and commercial buildings where a significant portion of employees are now working from home, the pressure to upgrade lighting due to energy cost is reduced. Maintenance, repair and overhead (MRO) spending is down significantly due to reduced staff and hours of operation. Additionally, projects in hospitality, commercial office, and retail came to a halt in 2020 as these segments focused on stabilizing their core business or restructured to excel in other end user verticals.
Unruh expects institutional building projects (such as education and hospital) to be up and down in 2021 depending on multiple financial factors.
Picht agrees:
“Schools are reallocating budgets originally planned for facility upgrades toward spending on cleaning supplies, online curriculum, support hardware and other measures to help get students back in class or support online teaching. Hospitals are focused on dealing with COVID-19 patients. Elective and orthopedic surgeries that are money makers (and therefore fund such MRO projects) have been delayed and hospitals are looking for other funding resources.”
However, the outlook for the industrial segment is brighter. In many cases, industrial output is increasing due to the desire to reduce foreign dependence on products, and as a result, facilities will continue to expand and update their lighting technology. The industrial segment is an area where retrofitters may find some success in 2021, but this will be opportunistic and highly competitive.
On the retrofit side, employees learned how to make assessments with less-than-ideal site contact and interaction. The sales process shifted as cancelled trade shows and limited travel caused everyone to have to learn how to connect with customers in a virtual environment.
While retrofit groups have historically had challenges with scheduling/material acquisition, delivery, and access to facilities, 2020 presented more manufacturing delays due to shippers being overloaded. Errigo concurs: “We saw severe disruptions in supply chains, which caused some companies to have to leave the space altogether.”
Pellant says the new administration seems extremely green project focused, which should promote more energy efficiency and energy saving retrofits in the governmental sector. Many cities will have a pipeline of shovel-ready retrofit projects that can be quickly deployed.
He believes this will translate into good news for local communities:
“Building retrofit and repurposing is labor-intensive work that can create a significant number of jobs and inject money into local businesses and supply chains, many of which will be small and medium-sized enterprises hit hard by the pandemic.”
Buildings sitting vacant may be an opportunity for investors who are looking to acquire and increase the capitalization rate. As the energy service company market comes back strong, that will drive more incentives, more innovation in UV technology, along with the existing LED acceptance.
Residential is a fast-growing area, advises Picht, with multi-family complexes being built in droves. The warehouse segment is similarly booming, with ecommerce companies like Amazon needing more distribution facilities to meet the increasing consumer demand for ultra-fast shipping times.
Errigo predicts, “In the second half of 2021, I believe the majority of the country will return to a pre-COVID landscape.” More revenue will come from lighting upgrades in the governmental, industrial, and educational spaces in the first half of 2021. By the second half of 2021, look for significant growth in the commercial office, hospitality, and retail spaces due to pent-up demand.
Picht concurs that the industrial market will have the most consistent ongoing growth initially and that come Q4, lighting will move back into the commercial space.
The heightened focus on indoor environments will also be reflected in government spending, says Unruh:
“While a vaccine may alleviate the present danger, a renewed understanding of airflow, air supply, filtration and sanitization has grown from this experience. Those companies that can position themselves as experts with the ability to address these issues with a sound engineering approach will find success.”
Air-side solutions will dominate the growth, but will be supplemented with building access, occupant tracking, and overall security growth as well.
As prices go down and the technology becomes more user-friendly, Pellant expects even companies with low budgets will be looking to purchase the latest and greatest lighting products and technology designed to maximize energy efficiency. He believes this growth will be strongest in motors, controls, and anything renewable or green related.
UV lighting in healthcare spaces, federal and biotech spaces also seemed to take a leap into the forefront, according to Pellant. “There is a huge market for UVA, B, and C LED lighting fixtures and ventilation disinfecting in schools. We see this trend growing, especially as the price point becomes more attractive. It doubles as a good PR piece as well for patient care and infection control.”
Picht agrees, but with some caution. “UV technology requires some education; it is easy to buy into low-cost solutions that do not work. This technology will last in some form as more research improves the performance and reduces the cost.”
Building occupant tracking is Unruh’s pick. “Knowing who is in your building and where is important for health, security, access, and safety.”
When asked for their top advice, our contributing experts kept it simple but smart:
Picht:
“Be aware of your market and take advantage of EPAct, utility rebates, local codes and all the government programs that can impact the viability of a project.”
Errigo:
“Evaluate the financial and supply chain strength of manufacturing partners both in the short and long term.”
Pellant:
“See the world through the lens of opportunity and avoid creating a commodity out of the lighting retrofit industry. Focus on building value and confidence with your clients.”
Unruh:
“The age-old recommendation – stay close to and understand your client’s needs. In this year especially, those needs likely have shifted from what they were in the past.”
A final thing to consider: Retrofitters anticipating the potential growth outlined above should explore ways to make their business operate more efficiently now. In what looks to be a highly competitive marketplace in 2021, the ability to conduct audits, generate winning proposals and implement faster could be a key differentiator. See how much your business can save using SnapCount with our calculator.