Capitalizing on the boom

Distributors serving the greater Washington, D.C., construction market benefit from the burst in growth fueled, in part, by an influx of technology businesses

By -- Industrial Distribution, 7/1/2000

Politics is no longer the only game in town for Washington, D.C., and its outlying communities. The information technology industry is quickly gathering momentum in the area and creating an accumulation of regional wealth that is fueling one of the hottest building booms on the East Coast.

The economic boom can be seen-in the form of housing, business and school construction-as far south of Washington as Richmond, Va., and it stretches northwest towards Frederick, Md., and northeast toward Baltimore, Md.

According to a study released in May by U.S. Housing Markets, the first quarter of 2000 saw single-family permits rise seven percent in the Washington consolidated metropolitan statistical area (CMSA).

Although rising interest rates are predicted to hamper housing starts across the U.S., "the latest numbers indicate that the nation's housing market is still in very good shape," said Robert Mitchell, a home builder from Rockville, Md., and president of the National Assn. of Home Builders, in a May statement on housing starts.

The NAHB is forecasting that total housing starts will reach 1.6 million units in 2000, down from nearly 1.67 million units in 1999, but still a very strong rate.

Those statistics are consistent with what distributors serving the construction market in the greater Washington, D.C., area are experiencing first-hand.

"Here in northern Virginia, we've become one of the top areas for computers and that, more than anything, is driving our business. All of the companies locating themselves in this area are bringing people in by the droves," says Robert Davis, the manager of Noland Co.'s Washington complex, which is located five miles from downtown D.C. Noland distributes plumbing, HVAC and electrical supplies to the residential, commercial and industrial construction markets, in addition to its sizeable MRO supply business.

"Buildings start going up for offices," Davis continues, "then homes follow, then the schools and the stores. All of the infrastructure that it takes to keep people happy. Prince William and Loudoun counties are two really hot areas that are growing. And Fairfax County is trying to keep up with all the new things that are going on in the area, so they're having to go back and renovate so they can compete."

According to an April report in the Washington Post, ground is yet to be broken on an abundance of state-funded construction projects in both Maryland and Virginia that will go a long way toward continuing this region's building boom. The report noted planned projects as mundane as road and transit projects and as extraordinary as the National Capital Curling Center scheduled to be built in Maryland's Prince George's County.

In 2001, the Post reported, Maryland's spending on public school construction will exceed $250 million for the second straight year, compared to $100 million in 1995. Road projects spending will approach $1.3 billion. That state also approved nearly $380 million for sports arenas, science centers and chemistry buildings for the state's college and university campuses, more than triple the amount universities received for construction in 1995.

In Virginia, the Post said, capital spending is up. Lawmakers this year approved a six-year, $2.6 billion spending plan for transportation, driven in part by the $217 billion transportation program approved by Congress in 1998.

On the receiving end of this construction boom are distributors like Trio Fasteners in Ashland, Va., which specializes in selling fasteners used for assembling structural steel, as well as other fasteners, abrasives and cutting tools, to the industrial construction market in Virginia, Washington, D.C., some parts of Maryland and North Carolina. Three quarters of this STAFDA house's business is to the industrial construction market, with the remainder of its customers working in residential and commercial construction.

Reid Hopkins, sales manager for Trio Fasteners, says the construction boom in the area has had a direct affect on Trio, which has experienced considerable growth during the past four years.

"Everything is about the increase in population growth-that's what's driving everything," Hopkins says. "We've always had a prison job, a wastewater treatment plan, or a school project going in the six years I've been here."

Trio's products are uniquely suited to serving the current trend of building centrally located regional jails to serve four or more counties.

"We sell them tamper proof fasteners," Hopkins says. "When you want no one to be able to tamper with a device, whether it's a lock or a hinge, that's what you want. Tamper proof fasteners are installed with a unique driving tool so that no other object can tamper with the fastener. Anything you do in a prison has got to be anchored to the concrete wall or floor. Then you have to make it tamper proof."

Trio is also seeing lots of new schools being built in the central Virginia area to handle the population growth, as well as growth in the utilities market. Trio also is involved with bridge building and utility projects inside the Washington Beltway, as well as some military construction projects.

"There's no slowdown in sight. I don't think we've even seen the peak yet," Hopkins says. "Contractors around here are booked up for years. And we're just as busy as we can be and trying to be more efficient all the time."

Northwest of D.C. in Frederick, Md., the story is much the same.

Doug Frushour, who manages Noland's Frederick complex, says that in the last five years or so, new corporations have been moving into the area, diversifying what has traditionally been a bedroom community for Washington, D.C., and Baltimore, Md.

"For the past few years, construction has been going at a frantic pace. Frederick has been listed as one of the fastest growing cities in Maryland and one of the top in the region as well," Frushour says.

Frushour adds that the housing market has traditionally been strong in the area, and that Noland sells to contractors building everything from $150,000 townhouses to $1.5 million homes that sit on "small farmettes" in the countryside.

Both Frushour and Davis note that what happens with interest rates will control a certain amount of residential growth in the area, but they say there's plenty of commercial and institutional work in the pipeline to keep business strong for the next couple of years.

"The commercial projects and infrastructure things like bridges and schools are huge right now," Frushour says. "As the commercial businesses come to town, with those will come residential housing demands and unless the interest rates go crazy, I look for it to continue steady and strong."