Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Banking on Basements
Homeowners love to capture their basement space and turn it into truly usable living space, but the idea of dealing with the damp and the concrete has killed more than a few projects.
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Homeowners love to capture their basement space and turn it into truly usable living space, but the idea of dealing with the damp and the concrete has killed more than a few projects. Carl Hyman and his company, Alure Home Improvements on Long Island, have found a way to breathe life into the basement. In fact, Alure's basement renovation business grew so much last year that the company's opened a location in New Jersey just to tackle this lucrative market.
"We started to sell basements in New Jersey in November," Hyman says. "We've gone from zero sales to [having] four salespeople [there]."
On Long Island, Alure began seriously targeting this niche about a year ago. Hyman started with one full-timer in the division, which has grown to 44 employees. In 1999, the $13 million remodeler did less than $1 million in basements, Hyman says. This year, the company should do $8 million to $10 million. In 2001, he says, "We'll do more basements than everything else put together."
Mike Kuplicki, the basement division's general manager, says Alure's target market is any house with a basement. In addition to a "tremendous" number of older houses, Kuplicki says there's a building boom on the east end of Long Island. Homeowners there are opting for 8- or 9-foot basement ceilings. "They're looking to expand their house without expanding their house," Kuplicki says. "You don't have to invest in a room addition. They can keep the footprint the same, keep the yard the same."
Hyman says the fuel for the move into basements was a product introduced by Owens Corning two years ago. Owen Corning's basement wall finishing system is designed for basement application, below grade. Hyman says the company showed him a prototype and asked him to test market it. "It looked interesting," Hyman recalls. "Most of the others on my team thought I was out of my mind, [but] I agreed to be a guinea pig."
Hyman set the division up with Kuplicki last year. The Alure sales team sells the product, then the installer goes out with the salesperson for a preconstruction meeting. A production manager handles 10 crews of installers, usually one-man but sometimes two. The average basement job, which takes about two weeks, is $18,000.
The system is a prefinished wall package, including insulation, says Kuplicki. The modular system comes in 4x8-panels and is reusable, he says. "You can dissassemble [it] to get back to the foundation. You can snap the moldings on and off. It takes two to three minutes."
The labor saving is what convinced Hyman to go forward with the basement niche. Hyman says many projects are labor intensive and product nonintensive. "Labor is tougher to get," he says. "I'd much prefer to have something that's product intensive. I'd rather install product." This niche enables Alure to expand the pool of workers, he says. "You don't need as highly skilled a carpenter as you would for finish work in the basement."
Kuplicki says the project is a quick set up. "A one-man crew can produce a large basement in about 10 working days. You're ready to move in."
Rod Sutton is the Editor-in-Chief for Professional Remodler. Please email him with any comments or questions regarding his column.
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