After a 2-year slump in the construction market, U.S. building materials firms hope a trend to so-called green — or energy efficient — building will steer them back to growth.
The U.S. market for new, non-residential 'green buildings' — such as offices and factories — is forecast to more than double to as much as $145 billion in five years, according to industry researcher McGraw-Hill Construction.
Building materials firms are using ecological, non-hazardous and recyclable methods to make more affordable wood, plastic and glass composites, cement and roofing materials to improve energy efficiency.
Trex Co Inc, for example, claims to recycle 1.5 billion grocery bags a year to manufacture its building products, and Apogee Enterprises Inc says its spectrally-selective coated glass can reduce lighting and heating, ventilation and air-conditioning energy consumption by more than a quarter.
Other companies make electrical controls and solar systems.
"Controls make buildings smarter … turning systems off when no one is in the room. These are the areas where investments are going," said Brian Kremer at Roth Capital.
Building products makers looking to capitalize on the green drive include Trex, Apogee Enterprises Inc and Beacon Roofing. Contractors such as URS Corp, Aecom and Tutor Perini are also positioned to gain from the trend.
Johnson Controls, Cree — which was picked by retail giant Wal-Mart to supply light emitting diode (LED) lighting in more than 600 of its stores, motor makers Baldor Electric and AO Smith, Lime Energy and distributor Wesco International have more exposure to green building.
Building owners, themselves going through a lean patch, are investing more in green projects to exploit lower costs and government incentives such as tax credits.
Green building legislation and initiatives have been adopted at a dozen federal agencies and in 33 states.
The push for more energy efficient buildings is also helping as a marketing tool.
"If they can add value, they can resell at a higher price or command better rent," said Michele Russo of McGraw-Hill Construction Research & Analytics.The U.S. Green Building Council (USGBC), a non-profit organization, reckons sale prices for energy efficient buildings are as much as 10 percent higher per square foot than conventional buildings.