The DuckerFrontier Approach
DuckerFrontier traditionally utilizes Euroconstruct forecasts as a basis for our projections for material and/or system use in Europe. This source has been found to provide the level of detail DuckerFrontier appreciates (e.g., overall activity, segmentation by building type, new construction and renovation) for 19 countries with a common methodology and long history of expertise.
Initial post-Covid-19 projections were first available in June, and DuckerFrontier felt these predictions were pessimistic as an outlook for the remainder of 2020. Over the summer, DuckerFrontier met with key material construction participants who indicated a more optimistic view than that of Euroconstruct. The most recent updated August forecasts provide a more optimistic view – yet not quite matching some of our clients’ experience in various countries with actual sales better than expected.
DuckerFrontier is in no way underplaying the reality of the crisis, rather highlighting the necessity to – in addition to using solid forecast sources – listen to the signs coming from the value chain (i.e., suppliers, customers, partners, end-consumers) that usually indicate market signals of what is going to be accelerated in the future, especially during times of crisis.
Unanticipated Situations Can Bring New Opportunities
During the past several decades, DuckerFrontier has observed that crises became accelerators of evolution rather than generators of new trends in the building industry; a crisis typically accelerates existing evolutions that had already started in the past.
This understanding leads us to a better anticipation of what can be anticipated in the building industry after Covid-19. For example, the increasing trend of working from home initially created some fear of a strong decline in demand for non-residential buildings, particularly offices. Based on experience, evolutions that were already in place pre-Covid-19, have been boosted by the crisis and now becoming priorities.
Stronger Work Environments Viewed as Welcoming for Employee Return
In the non-residential segment, health, well-being and comfort have become key priorities for working space users and, therefore, building owners. Employers need to attract their employees to the office to maintain direct interactions and a strong working environment. Working at the office may become synonymous of specific events: team meetings, brainstorming, sales events, etc. thus creating the need for more inviting spaces. Building occupants (and soon, investors) see the value in their well-being: larger spaces, increased/better air quality including windows that open and balcony spaces, daylight, plants, contactless technologies for doors, lights and elevators, and more.
An individual’s home has become an extension of their office, but the office now becoming an extension of the home – workspaces must provide a high degree of comfort and inspiration. This trend is fully supported by the mindset of the new generation of employees who pay much more attention to their environment than the previous generation; a mindset evolution that support the changes started before the and boosted as a result of the Covid-19 pandemic.
Building sector crises, such as Covid-19, also typically results in the ‘natural selection’ of buildings. High performing buildings will strongly benefit from the change in demand by employees described above, average quality buildings will require renovation, and the older non-attractive buildings will fall behind – becoming stranded assets.
In the end, DuckerFrontier utilizes third-party forecasts as one piece of a bigger puzzle when determining future forecasts within any given industry. Our company relies on both secondary and primary research, triangulated with added internal experience and databases, to provide the best recommendations to our clients. DuckerFrontier sees the Covid-19 crisis as a generator of many opportunities in the building sector. The potential limitations of business growth will not come from demand itself, rather from the supplier’s ability to move with agility despite the reduced capabilities generated during the quarantine.
DuckerFrontier’s Building and Construction team continues to follow and analyze the key trends and impacting the industry, both during and post Covid-19 disruptions. Visit our Covid-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.