As originally published in Properties Magazine
By: ProcurementIQ Analyst, Deonta Smith
Landscape enhancement services are considered one of the most effective ways to boost a facility or structure’s value. Though the chief benefits of landscaping services are primarily financial (e.g. increasing the value of a property, enticing prospective buyers and reducing heating and cooling costs), there are also numerous health, environmental and social advantages associated with these services. To examine these benefits, ProcurementIQ has taken a deep dive into demand trends for the two largest landscaping service markets.
Landscaping to Draw the Eye
Businesses, such as retailers, hotels and amusement parks seek landscape architecture and design service providers for their in-depth knowledge of grading, drainage and horticultural and structural spacing to plan and create useful, attractive arrangements of natural and constructed elements that conform to governing codes and regulations. Landscape architecture and design services are good for boosting property values, as well as reducing storm water runoff during periods of high precipitation, controlling temperature extremes and creating an appealing environment to reduce stress levels (e.g. terrain reshaping, installation of mood lighting or bodies of water).
For residential building developers, homeowners and home building construction firms specifically, landscaping architecture and design are prized services. Coming out of the housing crisis, an abundance of reduced-price and foreclosed homes created a buyer’s market. As a result, from 2014 to 2017, stakeholders have been aggressively buying these homes and remodeling them to boost resale value. However, as home price growth has slowed in recent years, homeowners have been encouraged to identify more creative ways to enhance a home’s value; one proven practice has been to incorporate unique landscape designs around the structure. As these trends have pushed up demand for landscaping architecture and design services, firms have had the flexibility to raise prices at an estimated annualized rate of 2.0%. ProcurementIQ expects prices to rise at the same rate from 2017 to 2020.
Maintenance to Keep the Attention
According to the National Gardening Association, more than 75.0% of households participate in some form of landscape maintenance. This includes seasonal cleanups, mowing, plant fertilization, weed control, cultivation activities and a host of other landscape-related projects. Consistent maintenance is integral to maintaining the ambiance of a community. In fact, residents and prospective residents perceive cities and properties with well-maintained landscapes as more desirable places to live. Additionally, landscaping can add up to 14.0% to the resale value of a building and speed its sale by as much as six weeks, according to the Associated Landscape Contractors of America.
During the past three years in particular, heavy investments have been made in landscape maintenance services by homeowners, homeowner associations, local businesses and local municipalities. In line with an estimated 5.4% annualized increase in private spending on home improvements, demand has been strengthening for landscape maintenance among homeowners and other entities with a stake in maintaining a city’s attractiveness. Universities have also emerged as key buyers of landscape maintenance services as part of a push to improve the appearance of campuses to draw new students. Although tuition funds a portion of landscape maintenance work, universities often rely heavily on government funding to assist in financing these projects. Consequently, universities’ demand for landscape maintenance services is dependent upon the amount of government funding allocated to universities. Due to growing tax revenue, government funding for universities has increased, which has boosted demand for landscape maintenance. Rising demand from major markets (i.e. residential, commercial, education, government operators, and a wide range of hospitality establishments) has been causing landscape maintenance prices to rise at an estimated annualized rate of 1.2% during the past three years, a trend that is expected to persist through 2020, according to ProcurementIQ projections.
Landscape enhancement will continue to be a preferred method of boosting property value, meaning that services will be in high demand during the next three years. However, as home prices rise and local government increases investment in city beautification efforts, demand for more distinctive landscape designs will spike, prompting price growth for landscape enhancement services. To mitigate the impact of rising prices, buyers should establish relationships and engage in long-term service agreements with service providers. Landscape design and maintenance firms that have experience with a specific buyer’s land will be in better position to suggest and effectively incorporate modifications related to living elements, bodies of water, land formation, terrain shape and elevation. These relationships will not only help buyers leverage their purchasing power to receive more favorable prices, but enhance buyer satisfaction due to the landscape firm’s greater familiarity with the buyer’s land and preferences.