ConstructionPro Week, Volume: Construction Advisor Today - Issue: 123 - 09/02/2011

Demand for Green Building Materials Expected to Skyrocket

Demand for green building materials is expected to reach $71.1 billion in 2015 in the U.S. market, climbing about 13 percent per year, according to projections that Cleveland-based The Freedonia Group recently released.

Freedonia believes that the largest value gain over the next five years will come from concrete products bearing recycled content, such as fly ash and blast furnace slag. The market-research group expects the value of concrete products to increase approximately $11 billion to $16.2 billion from low 2010 levels of about $5.5 billion. In addition to the recovery in construction, green concrete products are expected to continue to gain market share because the use of recycled materials in mixes reduces the volume of waste sent to landfills while often improving finished slab or structure performance.

“While the rising use of green materials will support gains, the most important driver for demand will be the expected rebound in the construction market from low 2010 levels,” Freedonia predicted.

Demand for several green building products is expected to post gains exceeding 20 percent annually through 2015, benefiting from greater availability, environmental concern, and more stringent regulatory or building code standards, coupled with construction market rebound. In addition to concrete featuring recycled content, products include water-efficient plumbing fixtures and fittings, energy-efficient lighting fixtures, and permeable pavement. However, with the exception of recycled concrete, the market for most of these materials is considered fairly small, and the additional demand is expected to be relatively modest in value terms.

Industry Analyst Provides Additional Details to GBI

In an email interview with Green Building Insider, industry analyst Dave Petina provided the following additional details:

GBI: Which types of professionals is the report targeted to, and how may those professionals be able to use the report? About how many people are expected to read the report?

Petina: We decide which titles to publish and after the study is done market it to the leaders in the industry. Any number of customers may occur.

GBI: Besides concrete with recycled content, efficient plumbing equipment, efficient lighting, and permeable pavement, what other green materials are addressed in the study? Whose definition of “green” was used for the study?

Petina: We did use U.S. Green Building Council's definition for “green” in that we looked at products that earn LEED [Leadership in Energy and Environmental Design] credits. However, we did not attempt to count LEED credits for “local content” but instead focused on products that were “green” due to properties of the materials themselves -- e.g., recycled content, energy-savings. Also, we did discuss the International Green Construction Code, which is being developed. But, since that code is still under development, we didn’t feel comfortable using any preliminary definitions from it.

GBI: Could you provide a year-by-year and/or a product-by-product breakdown of expectations for growth over the next five years in terms of revenue generated by sales of green-building materials?

Petina: We have only five- and 10-year forecasts.

GBI: Your firm states that green materials will account for an increasing share of materials used in construction. The green-materials share is expected to rise from what percentage of the market to what percentage and by when?

Petina: We don’t have a good neat answer for this. Pricing of green materials are more expensive than all construction products and the study was done in dollars so it would not be a direct correlation between green and all materials. They are generally growing in every area. For example, lumber is going from 3 percent in 2010 to nearly 10 percent in 2020, and HVAC Systems were 24 percent increasing to 35 percent in 2020.

GBI: What methodology did your firm use to arrive at these estimates?

Petina: Information and data on the green building materials industry were obtained from a variety of primary and secondary sources. Consultations with producers, end users, industry specialists, and trade association personnel were pursued. Secondary data were obtained from government sources, trade associations, and other private sources. Corporate information sources included annual reports, SEC Form 10-K filings, product releases, prospectuses, and conversations with responsible officers within the companies themselves. Publications consulted for background information include Building Design and Construction, EcoHome, Engineering News-Record, Floor Focus, Sustainable Industries, and Window & Door.

GBI: Do these estimates apply only to the U.S. market or the worldwide market?

Petina: The U.S.

GBI: When may a follow-up report be conducted? What other reports, if any, have you recently released or are working on that relate to green buildings?

Petina: We usually do new editions every two-and-a-half years.

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