In the fenestration industry, a few objectives frequently consume the conversation: price, aesthetics, security, indoor air quality and energy performance.
Doors and windows are two important elements of a building’s envelope and they directly affect how the structure performs on multiple fronts, not to mention the health and wellbeing of inhabitants.
As such, here are a handful of trends influencing the fenestration industry over the next 5 years.
Preference for Single Family New Builds
There is currently a positive de-urbanization trend, with consumers investing in new home builds, as well as repairing and remodeling older structures in less-condensed areas, which drives demand for new doors and windows and benefits the overall fenestration market. While preference for single family new builds remains high, consumers are settling for what housing is available in an expanding multi-family and build-to-rent environment.
Manufacturers and suppliers saw robust sales growth in the latter half of 2021, with this pace expected to persist in 2022 as individuals and developers continue to invest in housing to catch up with demand. According to the US Census Bureau, the 2021 homeownership rate was 64.8%, up from 63.5% in 2016, and in alignment with historical rates.
This is another factor influencing the demand for new single family homes as current homeowners seek ways to upgrade from their starter homes into a better version of house for their needs and first time homebuyers seek to get into the market any way they can during what is still a strong seller’s market.
With a CAGR of 6.2% expected for the next 5 years, much of this growth is projected to come from new single family home construction.
Fenestration Industry Opportunities Based on Share of Aging Housing
Take a look also at where the majority of homes in the United States were built before 1980, when modernized, and standardized building codes, were adopted.
Areas in red and orange present greater opportunity for window and door replacement projects to increase the energy efficiency of the home and give seller’s additional leverage in their asking price. The amount of aging housing in mid-western and north-eastern states, and especially in the Rust Belt and Great Plains regions should be guiding your go-to-market strategies. Repair and remodel opportunities are much greater in the Rust Belt and greater northeast due to lack of available land, but the Great Plains regions hold land ripe for strategic new construction opportunities.
Increasing Emphasis on Inventory Holdings
In general, raw materials and finished products are taking longer to acquire. Some building professionals are addressing this problem by using different shipping methods and stocking up on materials and products as their cash flow allows.
The current supply chain landscape is influencing contractors and manufacturers to get creative when planning for the future—especially since these logistical challenges aren’t predicted to go away until sometime in 2023.
Throughout the building products industry, the general consensus is that construction is at a discount today and will only cost more tomorrow. This mindset is driving everyone to acquire more product than they need today in order to hedge against supply chain bottlenecks and rising product costs that could stall new builds and window replacement projects yet to start.
43% of remodelers reported completing a project that included installing energy efficient windows and doors in the past year.
This means that unit sales projections within the fenestration industry need to remain conservative so as to not overestimate true demand for windows and doors.
Mergers and Acquisitions on the Rise
In response to high raw material costs, windows and door manufacturers are increasingly seeking out strategic acquisitions that enable them to achieve market share growth.
As with other sectors of the building industry, bottlenecks along the supply chain and rising costs of raw materials pose a challenge for manufacturers, contractors and consumers in 2022. Commodities like steel, PVC resin and aluminum stemming are increasing in price.
Because the price of standard windows has remained at a bit of a plateau point for the past couple of years while costs have risen year over year, independent window manufacturers have been pushed out of the market. They are unable to compete with large manufacturers that are able to vertically integrate their distribution network. Concurrently, the severe fragmentation of the window market with regional and local stakeholders has slowed the expansion of large manufacturers’ efforts to expand distribution nationwide. Vertical integration of these regional stakeholders, whether it be wood, vinyl, or metal fabrication, is expected to continue.
Customers Seeking More Aesthetic Options
The function of windows has become increasingly improved over the past several decades. Now, homeowners, architects, and builders are seeking wider selections in the form of these components of the building envelope.
Customers want more options. Demand for a wider range of styles, colors, and applications is now driving product specification and selection. With architects and contractors more willing than ever before to try a new brand, the one with the perfect product option has preference for the spec.
Customers are also seeking window and door options that allow them to capture more natural lighting. Demand is shifting towards products and brands that provide products suitable for large window walls and convertible spaces.
Customers Scouting for High Impact Resistant Window Ratings
Along with energy-efficient options—which can bolster a building’s resale value and save owners money over time—consumers also value impact-resistant windows that can reduce potential damage from natural causes while acting as a security measure as well.
2021 marked the sixth consecutive year of above-average hurricane activity in coastal areas off the Atlantic while, at the same time, 2021 and 2022 have seen a majority of movers migrating to these coastal areas.
In response, demand for window replacement projects in high wind speed zones is anticipated. Anything a property owner can do to decrease the potential for disruption, inconvenience, and maintenance costs due to weather related incidents, the better. Further, Pros seeking to reduce warranty claims and call backs are opting for more durable options.
Customers Seeking to Improve Wellness
Similarly, a majority of people seek to improve their indoor air quality by managing household dust that results from poorly sealed windows and doors, according to findings from joint research that our team at The Farnsworth Group conducted with the Joint Center for Housing Studies of Harvard University.
The Race to Cut Production Costs on Thin Triple Pane Windows
One innovation that is causing ripples in customer behavior are thin triple pane window units. Because this technology aligns with the proposed U.S. Energy Star 7.0 specification, there is plenty of growth potential in this area. Thin triple pane window units are a more cost-effective and easy to use alternative to traditional triple pane units.
While more cost effective than traditional triple pane units, thin triple pane units are still out of reach for most existing homeowners and builders looking to scrape out a sliver of profit margin in their new builds and homeowners working to stay within their budget for a window replacement project.
R&D work into reducing the cost of these thin triple paned units is being driven by the pace of market pressures from consumers and regulators alike aiming to decrease the barrier to entry for these windows.
Because of the direction the market is moving, astute windows manufacturers will start educating the installers in their contractor networks sooner than later on these emerging technologies and shifting their mindsets about the sufficiency of Energy Star Ratings so that when an affordable adoption is produced, market saturation can be accelerated.
More Investment in Solar Window Development
Another example of a viable sustainability innovation is a coating that can make a window double as a transparent solar panel.
In light of evolving consumer demand—along with supply problems—it is important to embrace emerging window and door innovations. Manufacturers can address sustainability at every point of the product development process.
The challenge is to temper the higher price points often associated with eco-friendly products. That could take place at the product development stage, or it’s a matter of sharing with suppliers and consumers the well-articulated advantages of sustainable systems, products and practices.
Customers Motivated by Window Replacement Rebates
According to findings from the 2021 Healthy Home Report, homeowners reported that projects to install energy efficient windows and doors is top of mind to undertake in the near term.
48% of respondents reported a desire to have energy efficient windows and doors but do not currently have them.
Utility Companies that have been offering rebates for homeowners to take on window replacement projects have seen adoption in varying geographic segments.
Manufacturers who work with the stakeholders in their distribution channel to educate the end customer about local rebates can expect to see increasing unit sales in those areas.
This provides further impetus to explore sustainability best practices and innovative eco-friendly products as more purchase decisions will be based on energy efficiency.