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Golf Businesses Expect Recent Surge to Continue into 2023

By
Ted Perez
Features Golf Preview Special Coverage

Staying the Course

Ted Perez

Ted Perez, long-time pro at East Mountain Country Club

When Ted Perez Jr. talks about the 2023 golf season, he uses the present tense — and even the past tense on occasion.

Indeed, Perez, the pro and co-owner of East Mountain Country Club in Westfield, said the season — for his course, anyway — began in January, as it sometimes does; this family-owned club is famous for being open whenever there is no snow on the ground.

But this January was different from just about any other that came before it, said Perez, who said the course was probably open for play all but a few days that month. And it was open most every day the first three weeks in February as well.

March wasn’t as kind, with the course closed several days by snow and play reduced to a trickle on many others, he said, but overall, it’s been a phenomenal start to 2023.

“I’ll call this a non-winter,” said Perez, whose father, Ted Perez Sr., built this course, located just a long par 5 from the runways at Barnes Municipal Airport, 60 years ago. “I wish every winter could have been like this one.”

Elaborating, he said winter golf of this kind is a real boon for the course because the revenue generated isn’t offset by the expenses encumbered most of the rest of the year, everything from cutting the grass to overseeding the fairways to paying the people to perform those tasks. “My father used to say, ‘it’s like finding money on the street.’”

As the 2023 season begins for most courses in the region — a few others were open for play through during stretches of the winter — they are hoping that their springs, summers, and falls are as good, relatively speaking, as Perez’s winter was.

“My father used to say, ‘it’s like finding money on the street.’”

Actually, they’ll settle, if that’s the right word, for what they’ve seen the past few years, a recognized surge in play that started during the summer of 2020, the height of the pandemic, when there was little else for people to do — they couldn’t even play tennis due to restrictions imposed by the state.

That surge continued into 2021 and then 2022, said Jesse Menachem, executive director and CEO of the Massachusetts Golf Assoc., noting that the numbers were down slightly in 2022 from 2021, but still better than the years leading up to the pandemic.

“We saw levels jump considerably in 2020 and into 2021,” he told BusinessWest. “In 2022, we were able to sustain levels and continue to grow. Overall, we’ve been able to retain the new golfers and the golfers who were brought back into the game by the pandemic. Our facilities, our operators, and our organizations are doing a great job of keeping the game sticky, keeping it relevant.”

The questions on everyone’s mind going into the new year are … will this surge continue?, and to what extent? As with the weather — always the biggest question mark heading into a new year — no one really knows the answers, but those we spoke with project another solid year for the local golf industry.

EJ Altobello

EJ Altobello, head pro at Springfield Country Club, is among those projecting the recent surge in the region’s golf industry will continue in 2023.

EJ Altobello, head pro at Springfield Country Club, a private club, said most all signs point to a continuation of current trends (his club now has a healthy waiting list for membership), and he points to Florida, where the first three months of the year have been on par (yes, that’s an industry term) with the past few seasons, as evidence.

“They’re off to a great start,” he noted. “Golf retail is off to a great start, golf rounds are off to a great start, and I think things will go the same way up here — there’s no reason to believe otherwise.”

Steve Elkins, chair of the board at Amherst Golf Club, a nine-hole track owned by Amherst College and managed by the board members, agreed. He said the past few years have been solid, and revenues have helped put the course on more solid ground than it has been in some time.

“We’re in good shape … we’re in as a good a shape as we’ve been in a very long time,” he said, adding quickly that courses have to be careful and smart with their spending to stay in solid shape financially.

On the downside, if it can be considered that, it is somewhat more difficult to get a tee time at some courses, said Menachem, and there are now waiting lists at many private clubs. So accessibility is certainly not what it was in the pre-pandemic years.

But for those in this unpredictable business, those are definitely good problems to have.

 

Green Lights

It’s called Good Friday, Bad Golf.

That’s the name of the first organized golf outing of the year at East Mountain Country Club, and, as that name suggests, it’s played every year on Good Friday, which means that some years, it isn’t played at all due to inclement weather, especially when Easter comes earlier rather than later.

This year, it’s set for April 7, and Perez is hoping his luck with the weather in 2023 holds, because there are 140 signed up for golf and the dinner to follow it. Meanwhile, April 7, or thereabouts, is when most courses in the area project to be open, if not a week or more earlier — a solid head start over most years.

“We saw levels jump considerably in 2020 and into 2021. In 2022, we were able to sustain levels and continue to grow. Overall, we’ve been able to retain the new golfers and the golfers who were brought back into the game by the pandemic.”

Jesse Menachem

Jesse Menachem

And as they open, they’re expecting to see roughly what they’ve seen for nearly the past three seasons — more business than they were seeing in the years leading up to the pandemic. In most cases, much more.

Indeed, through the end of the 2010s, golf was in the doldrums, continuing a downward trajectory that started in the early 2000s. For many, and especially the younger generations, the game was too time-consuming and too expensive, and they were putting their time and money elsewhere.

Public courses struggled to get daily play, often despite attractive specials, and private clubs, many of which had been historically full and boasted waiting lists, had plenty of spots available and were marketing themselves far more aggressively than ever before to bring in new members — and much-needed revenue.

The downward spiral was punctuated by the closing of several courses in the area, including Hickory Ridge in Amherst, Pine Grove in Northampton, and Southwick Country Club. Despite this thinning of the herd, many area courses continued to struggle.

Then, the pandemic came.

Golf was still slow and still comparatively expensive, but suddenly, people didn’t seem to care, or care as much. People of all ages and other demographic categories were looking for things to do, ways to keep active as they were eating and drinking more, and opportunities to socialize — and golf could check all those boxes, to one extent or another.

Then-Gov. Charlie Baker lifted tight restrictions on golf in early May 2020, and for the rest of the year, clubs saw surges in play, memberships, and retail sales.

Elkins said Amherst Golf Club (AGC) received a huge boost from students, most of them from UMass, who were still living in the area but not attending classes in person. Looking for things to do with their time, maybe 30 bought attractively priced memberships at AGC, a semi-private course.

Amherst Golf Club

Amherst Golf Club, a 9-hole track with a long history, has seen an increase in memberships and overall play since the start of the pandemic.

“We got a huge COVID bounce from students who couldn’t attend classes in person,” he said. “It was a one- or two-year bump, and now it’s gone away.”

Still, membership remains solid — it’s currently at about 265, down from the peak but certainly up from the pre-COVID years — and daily play (there’s a $32, play-all-day rate) has been stable as well and certainly helped by the closing of Hickory Ridge (just a mile or so down the road) a few years ago.

 

Different Strokes

The surge in play — and spending at local clubs — continued, and even accelerated, in 2021, despite the loss of maybe two dozen days of play to seemingly non-stop rain.

The skies brightened in 2022 — when obsessive heat was the bigger problem — and those trends continued. Indeed, almost everyone we spoke with said 2022 was down slightly from the year before, but still quite solid and better than pre-pandemic.

“Last year wasn’t quite as good, but right in that same ballpark,” said Altobello, using total rounds and membership, which is at a 15-year high, and his main measuring sticks. He noted that the difference might have been as simple as more people returning the office last year, making it somewhat more difficult to “sneak out for an afternoon round,” as he put it.

Overall, though, the numbers were quite good, and they provided ample evidence that those who picked up the game during the pandemic, or picked it up again after putting it down, were, indeed, staying with it, said Altobello, adding that these increases were across the board, and especially encouraging when it comes to women and young people, two demographic groups that many feel hold the key to the long-term success of the industry.

“The indicators are that they are still here,” he said. “How long they stay … that’s to be determined. But as of right now, they’re still out there playing. We’re seeing more and more women in the game, more and more men in the game, and we’ve had a great increase in our youth programs as well.”

As play picked up over the past few years, there were some changes to the landscape, ones that reflect concerns about the cost of the game and the time it consumes, said those we spoke with. Indeed, the nine-hole outing, or ones that are even shorter, became far more common, and more accepted, than perhaps ever before.

“In many cases, people only have time for nine holes. That’s roughly two and a half hours on a full course, and that’s all the time many people have.”

“Ten or 15 years ago, that wasn’t even a thought,” Menachem said of a nine- or maybe six-hole round. “It was either 18 holes or nothing; now, nine holes is a far more realistic and accepted option for those with families, for those with shorter windows of time to play before work or after work. That is definitely a positive.”

Dave Twohig, the head pro at Amherst Golf Club for more than 40 years, agreed. “In many cases, people only have time for nine holes,” he said. “That’s roughly two and a half hours on a full course, and that’s all the time many people have.”

Amherst actually has two “loops,” as he called them, holes 1-5 and 6-9 — both wind up back at the clubhouse — that people can play if they have just an hour or so and want to get a little play in, and many do just that.

 

Round Numbers

Looking ahead, or at what’s right in front of them, in the case of East Mountain and other courses that have been open for play in Q1, those we spoke with said the outlook for 2023 is colored by optimism.

And the head start many courses were able to get will certainly help, said Menachem.

Indeed, he said that, for tracks like East Mountain and many others, especially in Eastern Mass. and on the Cape (maybe 20% of the state’s courses), the robust first quarter provides needed cash flow, as Perez noted, when there are few, if any, offsetting expenses.

“It’s like found money,” said Menachem. “You’re running on a thin operation, and you’re allowing access to the golf course in the condition that it’s in without much preparation on the maintenance front; it’s not too much of a heavy lift, and the revenue you’re able to derive should completely outweigh the expenses.”

Also, the early, solid start provides a buffer against possible headwinds, such as heavy rain and excessive heat, later in the year, he went on.

Meanwhile, almost all courses should be able to open earlier than what would be considered normal, said Menachem, who, as he spoke with BusinessWest a few weeks back, said 60 to 70 were already open.

Despite all the optimism that prevails within the industry, there are still challenges to be overcome.

Indeed, the ongoing workforce crisis is still making it more difficult to attract and retain help than it has been historically.

“Labor is still a huge issue, especially on the maintenance and operations side of the game,” Menachem said. “It’s not always been attractive to get up early and set up a golf course, and we want to make sure we can support the next generation of staff and make sure wages are competitive with other industries. Meanwhile, being a seasonal sport also has its challenges.”

Elkins agreed, noting that Amherst Golf Club has increased pay rates to remain competitive and hire and retain not only young people, but also some retirees looking to work and stay active.

Meanwhile, the higher cost of … well, just about everything poses stern challenges for clubs, most of which are operating on rather thin margins and without huge reserves to fall back on. In a word, clubs need to be careful, said Elkins, adding that this certainly the case at AGC.

“Making sure that we manage our cash is really important,” he noted. “Like a lot of courses, we’re in good shape, but we’re not going to spend a ton of money on something that’s not core to the course, because it’s risky. We want to make sure we have a good capital reserve and that we spend our money wisely.”

Perez agreed, noting that, despite his great start to 2023, he knows things can change quickly, and he’s learned to reserve judgment until he’s added up all the numbers in December.

“I don’t get too caught up in all the numbers until the end of the year,” he said. “I’ve been doing this a long time, and I know better than to get too excited in March. But it is good to have a non-winter like this one; it beats the alternative.”

 

Staying on a Roll

With the non-winter of 2023 now in the rear view, the region’s golf industry looks forward to the next three seasons.

They do with a spring in their step — figuratively but also quite literally, and optimism that the recent surge the game has enjoyed will continue.

Time will tell if they are right, but all signs indicate that area operators will be able to stay the course — in all kinds of ways.

 

COVID, Other Factors Inspire Entrepreneurial Energy

By
Cover Story

Changing Course

Susan Beaudry, founder of Beau Co. Wine

Susan Beaudry, founder of Beau Co. Wine

Among the many side effects of COVID and the so-called Great Resignation that has accompanied it has been a recognized surge in entrepreneurial activity. It has manifested itself in many ways, from soaring registration for the “Basics of Starting a Business” course at the Massachusetts Small Business Development Center to the absorption of many vacant storefronts, to area chambers filling their calendars with ribbon cuttings. Each story is different, but there are some common threads, including a desire to use the time and inclination provided by the pandemic to realize what’s important. And in many cases, it’s starting that business that one has always dreamed about.

 

Susan Beaudry says there’s a story behind every wine label she distributes.

That’s certainly the case with one called Sophie, a product of South Africa.

“The locals … their accents couldn’t pronounce sauvignon blanc,” she explained. “And it kept coming out ‘Sophie,’ so they named the wine Sophie. The wife of the husband-and-wife team that own it created this beautiful young woman that’s on the label — Sophie. The tagline is ‘the most beautiful woman that never was.’”

It is these stories — and, again, she has dozens of them — that go a long way toward explaining Beaudry’s fascination for wine, and her dream of creating a business that brings labels like Sophie to the 413.

It’s a dream she’s had for some time now, and one that became real because of COVID-19 — at least in some respects.

Beaudry, as many readers may know, was the executive director of the Springfield Symphony Orchestra, which was essentially shut down by COVID in early 2020, and there are now questions about when and if it will return to the place in regional culture it occupied before COVID arrived.

But that’s another story.

This one is about how Beaudry found the time — and the inclination — during COVID to move ahead and make that dream, called Beau Co. Wine, reality.

“Toward the end of 2020, we started seeing many people who were either laid off or who had left their jobs, for whatever reason, who wanted to start their own businesses.”

The wines she imports can be found, among other places, at the Springfield Wine Exchange, a new storefront in Tower Square owned by Carlo Bonavita, who is part of this movement, if we can call it that, as well. He decided a few years ago to go back into business — the liquor-selling business — for himself and found some additional motivation during the pandemic (more on that later).

Beaudry and Bonavita are far from the only ones to use this crack in time to pause, re-evaluate, and perhaps fulfill an entrepreneurial urge, said Samalid Hogan, executive director of the Massachusetts Small Business Development Center’s Western Mass. office. But not for much longer, which we’ll get to in a minute.

She told BusinessWest that, as a result of a number of colliding factors — from people losing their jobs to individuals losing interest in what they were doing, to remote workers not at all excited about orders to return to the office — there has been a surge in entrepreneurial energy.

“Toward the end of 2020, we started seeing many people who were either laid off or who had left their jobs, for whatever reason, who wanted to start their own businesses,” she explained. “And in 2021, we’re seeing a huge surge in people calling the office looking for help in starting a business. There were so many that we had to create another ‘Basics of Starting a Business’ class; we usually offer one a month, but we had to double up and increase the number of registrations from 30 people to 40 people.”

And now, she is part of this story, although she certainly doesn’t need the “Basics” course.

Indeed, she will be stepping down from her role with the MSBDC later this month to start her own consulting business.

Samalid Hogan

Samalid Hogan says many people reached a crossroads during the pandemic and chose the road to business ownership — and she’s one of them.

She said that, like others during this time of COVID, she did a lot of thinking about what was important and what she wanted to do with her life. And she decided that now was the time to put her own name in the door.

Actually, that name will be Greylock Management Consulting, a nod to the highest mountain in the state, a venture that will be focused on both existing businesses and the agencies providing services to startups, especially minority-owned ventures.

Hogan said she is launching this venture with both eyes open, and full acknowledgement of the fact that consulting is often a challenging way to earn a living and a significant departure from a steady job with a steady paycheck. But it’s a gamble she’s ready to take.

Actually, she’s taking two gambles. In addition to her own business, she has become chief operating officer for the Latino Marketing Agency, launched by Veronica Garcia, who also fits the profile of someone who found time and inspiration during the pandemic to move ahead with an entrepreneurial venture.

A television producer, soap-opera actress, and influencer in the Latino community, she worked for many years at New England Public Media, where she was the host of a popular and award-winning bilingual series named Presencia. In April of this year, when NEPM announced it could no longer produce the show, she left the station to start to Viviendo Sin Limites (Living Without Limits), with the goal of having it become the go-to resource for mental health and emotional well-being for the Spanish-speaking population. She also started the Latino Marketing Agency, in conjunction with Hogan, to help Hispanic-owned businesses with that critical aspect of their operations.

“I now have the privilege to know many entrepreneurs in this region, and I’ve found that marketing is one of the areas where they need assistance, especially Latino businesses,” she said, adding that, like Hogan, she is confident that her change of course career-wise, from steady paycheck to the uncertainty of being a business owner, is the right course.

 

Proof Positive

As noted, Bonavita is no stranger to wines and the liquor business. Indeed, his family owned and operated several liquor stores in the area, including Riverside Liquors in Agawam, and he worked at them for a number of years.

When he left in 2002, he signed a non-compete agreement that was 15 years in duration. It wasn’t long before he started counting the years down, and after a decade or so of working in property management, specifically condominium projects, he was quite ready to go back to working for himself.

COVID only served to accelerate the process further.

Veronica Garcia has launched two new ventures

Veronica Garcia has launched two new ventures, Latino Marketing Agency and a platform called Viviendo Sin Limites — Living Without Limits.

“When COVID hit, it changed the way we did business a zillion percent,” he explained. “It meant more hours, more everything, and at the age I was getting to, I was getting burned out and tired of this. I knew it was time to do what I wanted to do.”

And that was to open another business of his own, one he calls the Wine Exchange. He has a wide variety of labels with price tags from $7.99 to $115, and features a variety of gift baskets as well. He opened in October, good timing considering the approaching holidays, and said he’s off to a good start thanks to those who are returning to the office tower in his building and the others in the downtown area.

As for his decision to strike out on his own?

“I absolutely love it — I really do,” he said. “I’m not a guy who could retire completely, and I couldn’t sit at home. So this is perfect; it’s where I want to be at this point in my life.”

Beaudry, who provides most of the labels on his shelves and in his racks, said essentially the same thing, but her story — her dream of becoming a wine wholesaler, importer, distributor, and ‘enthusiast’ — is much different and took a lot longer to become reality.

“I was getting burned out and tired of this. I knew it was time to do what I wanted to do.”

She said her love of wine developed over time and especially when she was traveling extensively for her former employer, Simplex. Her travels would take her to its various branch offices around this country and other countries, and would inevitably involve visits to local attractions — and restaurants, preferably the ‘hole in the wall’ she asked to be taken to.

The good food she encountered was almost always accompanied by good wine as well. She would attempt to replicate what she encountered, food and beverage-wise, at dinner parties that would grow in size over time, with many of the attendees encouraging her to start her own restaurant or other related business.

She said she long desired to venture into wine importing and distributing, but life and family responsibilities made it difficult to leave a steady paycheck and take that leap.

“I think COVID presented the opportunity, with the symphony not performing and all the employees furloughed,” she explained. “Meanwhile, my daughter had just completed her first year of college, so the stars were aligned for me; I went ahead and got started.”

There are many stories like these being written in the region at this unprecedented time, when many have been sidelined by COVID and others have taken stock of their lives and decided they wanted — and needed — something different. The so-called Great Resignation (Bonavita and others we spoke to could be considered part of that) has prompted some to leave for other jobs, but others to absorb some risk and go into business for themselves, Hogan said.

The phenomenon has manifested itself in many ways, from new beer labels to the absorption of vacant storefronts, to area chambers of commerce giving their giant ceremonial scissors a workout with seemingly non-stop ribbon cuttings.

And also those soaring registration numbers for the MSBDC’s “Basics of Starting a Business” class, which is now offered online because of the pandemic, said Hogan, adding that she has seen a very diverse group of individuals gravitate to that offering.

By that she meant both older and younger men and women, those representing many ethnic groups, and people with varied backgrounds, from professionals to retirees, to some not far removed from the college classroom.

The class, as might be gleaned from its title, focuses on the basics — writing a business plan, legal considerations, licensing, insurance, business entities, and much more.

Many of the labels Susan Beaudry now distributes can be found at the Springfield Wine Exchange, founded by Carlo Bonavita, left.

“We don’t give advice during the class,” she stressed. “The goal is to give information to the attendees so they understand all that is involved with starting a business from an administrative, practical point of view; we don’t get into business models, and we don’t get into whether you have a good idea or not.”

Many who sign up for that class will eventually reach out for one-on-one advisory services from the agency, she said, adding that there has been a decided uptick in the number of people seeking such services.

 

Grape Expectations

As for her own venture, Greylock Consulting, Hogan is confident she has a good idea, one born from a desire help more small-business owners, especially minority-owned businesses. Her plan is to consult for individual businesses and also the various groups assisting such businesses and help streamline and improve the programs they provide.

She said she has several clients in the pipeline and is confident she can succeed in the challenging world of consulting.

“I’ve done consulting before,” she said. “You have to have a good, healthy pipeline of clients, there’s a lot of proposal writing involved, a lot of meetings prior to revenue-generating activities that you have to be willing to do and invest your time in. It’s a different world, but I like it.”

It’s a different world for Beaudry, as well, but one that she long desired to be in.

That said, she acknowledged that starting her importing and distribution company required more than time and inclination. It also requires capital, and a lot of contacts.

“It took a lot of tenacity — finding a warehouse, securing the insurances, the licenses, and everything else you need,” she told BusinessWest. “It’s really just been about working my contacts, people I know who tell me, ‘this is where we buy our great wines; the person who owns it is this … go introduce yourself.’ It’s been typical sales-call daily activity: going out, shaking hands, letting people know who I’m representing and some of the wines that I have available.

“It’s also very new — it’s just starting to gain momentum now,” she went on, adding that there have been distribution issues to contend with and other challenges, but, overall, she is making steady progress.

The next step is to create her own import activities, Beaudry said, adding that she will soon be traveling to Europe to meet with some small, boutique vineyard owners and winemakers, with the goal of importing some labels on her own.

She has a 2,000-square-foot warehouse in Westfield, one she hopes — and expects — to outgrow in only a year or two, and plans to distribute the wines she brings there to restaurants, country clubs, liquor stores, concert arenas, “anywhere you can buy a glass of wine.”

At present, she carries 58 different SKUs, and she’s connected with another distributor who will give her another 100, all them small, boutique winemakers that have a story.

“These are small businesses, family-owned, multiple generations for many of them,” she said. “I want to stick with these family-owned small options that have a lot of historic value — and they have interesting stories; the further back the history of the vineyard goes, the more interesting the story is, and a lot of people who love wines also love the stories.”

As for Garcia’s story, it’s another one where the opportunity and inclination were there to propel her to her current status as business owner.

She said she has long understood that, in general, and within the Hispanic community in particular, mental illness is something that isn’t talked about — or really understood. And she has long desired to create a forum where such issues could be discussed and both information and inspirational stories could be presented. So when NEPM announced that it would no longer produce Presencia, she gave her notice and created Viviendo Sin Limites.

Its stated mission is to “motivate, inspire, educate, and inform in a dynamic environment through interviews, blogs, conferences, sharing personal experiences related to our emotions and well-being, and offer tools to have an open, lively, positive, creative, and joyful mind,” and the goal is to be one of the first talk shows in New England for the Latino community through social media such as Facebook, YouTube, and Instagram.

As for the Latino Marketing Agency, it has already signed on a few clients to provide marketing and consulting services, she said, adding that she believes there is enormous potential for such a venture in this market — for both Hispanic-owned businesses and companies looking to market effectively to the region’s growing Hispanic community.

 

Dream Weavers

Summing up what she’s seeing, hearing — and doing herself, Hogan said that, because of the pandemic and issues springing from it, including those leading to all those resignations, many people are finding themselves at a crossroads.

And increasingly, they’re taking the road to entrepreneurship, one that certainly has its share of dangerous curves, speed bumps, hills, and dips. This road is not for the faint of heart, but in this climate, many people are finding they have what it takes to at least start down that road and pursue a long-held dream.

That’s how it is for Beaudry, who spends a good amount of time telling stories like the one about the Sophie label from South Africa and countless others now in her warehouse and on area shelves.

As for her own story, it’s still being written, and like the many others now generating some entrepreneurial energy, she’s finding each chapter to be everything she hoped it would be, and more.

 

George O’Brien can be reached at [email protected]

Banks See Healthy Surge of Commercial Lending

By
Ben Leonard outside Tower Square
Banking and Financial Services Special Coverage

Open for Business

Ben Leonard outside Tower Square

Ben Leonard outside Tower Square, where Country Bank just opened an office to service growing commercial business in and around Springfield.

Businesses didn’t stop borrowing in 2020, although much of last year’s lending activity had more to do with staying afloat with Paycheck Protection Program (PPP) loans than expanding operations. These days, with the economy in a more stable — if not exactly robust — place, many businesses are looking to invest and grow (that is, if they can get enough people to come to work), at a time when banks are sitting on more liquidity than usual and are anxious to lend it out.

When Country Bank announced it was opening a commercial-banking office in Springfield, Ben Leonard was intrigued by the opportunity, noting its similarities to the bank’s push into Worcester in recent years.

“Country Bank has been around a long time, but historically, the physical presence has been between Worcester and Springfield,” noted Leonard, a senior vice president who leads the new Springfield office, located downtown in Tower Square.

“But we’ve always served clients everywhere within a 100-mile radius, and we’ve seen more activity here,” he went on. “We have clients in Springfield and the greater area of Western Mass., so the impetus to build that office was to be closer to those customers. Part of that is growing our C&I [commercial and industrial lending] business — we see a growth market here. It’s an opportunity to grow.”

The C&I lenders who work in the Springfield office have experience in niches like manufacturing, distribution, and equipment-heavy companies, Leonard explained. “That’s kind of what the team knows, and that’s a big part of why Springfield and Worcester are appealing markets for the bank to expand in, because those kinds of businesses are what’s here.”

Those are also the kinds of businesses that maintained operations at a more or less steady level during the pandemic, and now they’re ready to grow — and borrow, he said, adding that the real-estate market is active as well.

Jeff Sullivan

Jeff Sullivan

“If there’s a hindrance to businesses growing, it’s labor. It’s not being able to buy the machine, it’s hiring someone to run the machine.”

“Certainly there’s a need for affordable housing, and we’re seeing a lot of turnover in real-estate properties, some repurposing, and some interesting dynamics with real-estate valuations being as high as they are. We’re also seeing situations where the dynamics have changed, where an office building is half-empty now, and it needs to change hands.”

In short, commercial lenders are busy, which marks a change from a year ago. More accurately, they were just as busy last year, but often dealing with some very pandemic-specific activities, from PPP loan processing to commercial-loan deferments, particularly for hard-hit industries like hospitality. These days, however, businesses (not all, but many) are moving past the treading-water stage and calling on banks to help them expand, not just survive.

“People are spending money,” said Jeff Sullivan, president of New Valley Bank, which is based in downtown Springfield, noting that some business owners are looking to buy property rather than continue to pay a landlord, while others are making speculative investments in real estate, rather than sitting on cash they may have accumulated during the pandemic, when spending was suppressed for both individuals and businesses.

“We’ll see two or three buddies get together and pool some money to use for a down payment on a two-family or three-family house, thinking, ‘I can make 10 to 15% on my money investing in real estate rather than have it make zero percent in my savings account,’” Sullivan said.

Many are first-time real-estate investors, he added, including young people and people of color aiming to build wealth, while established businesses are anxious to invest in their own operations.

“A lot of people have squirreled away cash from the government programs during the pandemic, and have been hanging onto that cash for a rainy day, and now they’re in a situation where they can use some of that — and banks are lending,” he said. “If there’s a hindrance to businesses growing, it’s labor. It’s not being able to buy the machine, it’s hiring someone to run the machine.”

Mike Lynch, senior lender at Florence Bank, said his institution is looking at commercial-loan numbers that are at least equal to pre-pandemic activity — and that’s on top of PPP loans.

Kevin Day says last year’s loan deferments were a “lifesaver” for many businesses.

Kevin Day says last year’s loan deferments were a “lifesaver” for many businesses.

“We do all kinds of loans, commercial real estate and C&I loans. We’ve seen strong activity across all sectors; it hasn’t been one pocket more than others,” Lynch said.

Florence Bank President Kevin Day agreed. “It’s kind of across the board — not every sector, necessarily; we’re not seeing many new hotels and restaurants opening up. But investment properties are creating new borrowers, and they need help with financing.”

The combination of low interest rates and high prices were driving the commercial-loan market a year ago, the last time BusinessWest tackled this story, and that has remained true. “In the real-estate market, everyone understands residential properties are hot,” Day said. “But in commercial real estate, it’s similar.”

 

Back to Normal?

One thing that has changed is the reliance on loan deferments, which was one of the leading stories in commercial lending (and retail lending as well, for mortgages, car loans, and credit cards) last year.

“We were very active in the deferment program. It was a lifesaver for a lot of businesses,” Day said. “As we’ve come into 2021, a lot of the deferment periods have ended, customers are emerging from pandemic lockdown activity, and things are becoming more normal.”

In the business world, “almost all commercial customers are out of deferments, back on normal schedules, and it feels like their business is gaining traction, getting back to to pre-pandemic levels,” he added. “In the hospitality areas — hotels, restaurants, and such — the pandemic hurt them, but even they’re coming back out of the malaise, and business is starting to pick up. The deferments gave people time, and as everything is starting to come back online, those businesses will get their customers back and should come out of it fine.”

Leonard said Country Bank handled close to 1,000 PPP loans totaling around $75 million.

“I’m happy to say we deployed a lot of that, and consulted with folks on the front end to be sure it wasn’t a rubber stamp,” he said. “It was a differentiator; I think the smaller banks really shined, and were nimble enough to support their customers. You can talk about being there for your customers when they need it, but could you deliver? I think Country Bank did.”

The bank is well-positioned to be a stable provider of financing going forward, he added, “because our capital ratios are head and shoulders above most other banks, which allows us to do a couple things. It means our lending limits are higher, but it also allows us to be patient and pragmatic with our customers.

“We have a lot of capital to lend and the ability to lend it, but where we’re going to be most successful is really understanding our businesses, so that we can bank them through cycles.”

“So I think we see an opportunity because of that,” he added. “We have a lot of capital to lend and the ability to lend it, but where we’re going to be most successful is really understanding our businesses, so that we can bank them through cycles. That is more important than ever, I think.”

Elaborating, Leonard said the pandemic reinforced the need for banks to have close relationships with their commercial clients and really understand their business, and to understand how much struggle — or success — over the past two years was a pandemic-induced anomaly and how much might remain the trend going forward.

“The value add for any banker, especially a C&I lender, is knowing a company well enough to make those educated decisions,” he told BusinessWest. “Our strategy is to spend a lot of time getting to know the companies we bank, so once we start a banking relationship, we’re in it, and we find a way to be pragmatic and support companies for the long term. That takes thoughtfulness on the front end.”

Sullivan said New Valley has been actively reaching out to small-business owners, who are often too busy running their business to seek help. “Larger companies have more resources and have banks calling on them all the time. There’s plenty of capital out there, and we want to make sure we connect with those business people, and that’s what we’re trying to do.”

Almost as one, bankers say there’s plenty of liquidity in the market, and once businesses began seeing some clarity with the pandemic — and, to be sure, there’s still plenty of uncertainty — they started moving into growth mode. But, again, the current labor situation is dampening some of that enthusiasm.

“I talk to a lot of business owners who are grateful the government bailed out businesses during the pandemic,” Sullivan said. “But there are some who would rather have a more normalized market where people are coming back to work.”

Meanwhile, “deposits are way up, and all the community banks I know are looking to put that money to work as loans rather than having it sitting around in cash. If anything, that’s become more exacerbated the last few weeks.”

 

Good Business

Like Country Bank, Florence Bank has expanded its geographic footprint in recent years, into Hampden County, specifically, to serve — and expand on — commercial business it was already doing in the region.

It has been a successful transition, Day said, one that has turned into retail business growth as well. But right now, he sees plenty of opportunity on the commercial side.

“Our credit quality, frankly, has never been better. People who had jobs and operated businesses during the pandemic have a lot of cash on hand. Hospitality businesses had to take time off because of the pandemic, but are now starting to get over it. Deferments helped people like that a great deal to come back online.”

The resulting liquidity in the system — and the resulting credit quality — mean delinquencies are at record lows, Day added. “Not only is business good, but the business we have is good business as well.”

 

Joseph Bednar can be reached at [email protected]

Home-improvement Industry Continues to Surge

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Home Improvement

Total Transformations

With the economy chugging along, home-improvement businesses report solid activity over the past few years, with the prospect of more to come. Locally, perhaps partly because of a relatively mild December and January, companies logged more customer calls during a time of year when homeowners traditionally want to hibernate. Now, on the cusp of spring, they’re ready to hit the ground running.

If there’s one thing R.J. Chapdelaine is grateful for, it’s changing tastes in home design.

Take, for example, the current trend — one that has been building over the past decade or two — of open floor plans.

“People seem to want to open up the kitchen to family room space, open the kitchen to dining room, and create that open floor plan. That, I think, is what we see the most, taking someone’s compartmentalized house and opening it up,” said Chapdelaine, owner of Joseph Chapdelaine & Sons in East Longmeadow.

“You see the center-hall Colonial with a dining room, living room, and kitchen, and we go in and open up the walls,” he continued. “I say, thank God my grandfather and my father built them the way they did. Now I can go in and open them up. It’s job security. And you watch — someday down the road, it’ll go back.”

Whatever the trends and the homeowner’s personal tastes, the home-improvement industry has been riding a wave for some time now.

According to the Home Improvement Research Institute (HIRI), the market for home-improvement products and materials grew by 6.3% in 2018 after a 7.3% jump in 2017. Breaking it down further, the professional market increased by 9.9% last year, while the consumer market saw a sales increase of 4.7%. That trend is expected to slow slightly over the next three years, but still increase by an annual average of 4.2% through 2022.

“What I’ve seen is a very strong push for kitchens and baths, additions, and remodels,” Chapdelaine said. “That seems to be our strongest portion of the business right now. The new homes have slowed for us considerably, but the kitchen, bath, and addition calls have been very strong, straight through the winter.”

“The new homes have slowed for us considerably, but the kitchen, bath, and addition calls have been very strong, straight through the winter.”

That’s somewhat surprising because normally calls slow through December, January, and February, he added. “Over the years, we’ve come to the conclusion that people really don’t want us in their house around the holidays. But this year, it’s been incredibly strong right through the winter months, which is great. As we gear up for spring, there’s a lot of work on the board. Usually we would be expecting the phone to ring now in anticipation of a good spring start, but it’s been ringing throughout the winter.”

Frank Nataloni, co-owner of Kitchens & Baths by Curio in Springfield, has also seen a busier-than-usual winter, perhaps because the snowfall has not been too onerous.

“We’re a year-round operation, but it really depends on the type of winter we have,” he said. “If we have a mild winter, what happens is demand ends up being spread out, and we see a bit more people through the winter. When the weather is really bad, nobody goes outside. Either way, spring is always the strongest time from a sales standpoint.”

According to the Project and Sentiment Tracking Survey conducted by HIRI toward the end of 2018, which queries adults across the U.S. about their planned home-improvement projects, outdoor living spaces will feature the most activity in the next three months. More than one-quarter of homeowners surveyed indicated they will take on lawn and garden and/or landscaping projects during this time.

R.J. Chapdelaine

R.J. Chapdelaine says the region’s older housing stock and demographic changes have contributed to a strong remodeling business in recent years.

Taking all types of projects into consideration, inside and out, the Northeast and South lead the way, with about two-thirds of homeowners in both regions saying they plan home-improvement projects this spring.

Meanwhile, whether homeowners shoulder the work themselves is relatively dependent on the project type. On average, a little more than half of all projects are of the DIY variety — and of those, many involve outdoor living spaces, with 82.6% of homeowners tackling landscaping projects.

“I have to say, people feel confident, and they’re willing to spend money on their house,” Chapdelaine said. “It seems as though people are upbeat, and we’re reaping the phone calls and the benefits of that consumer confidence.”

Trending Topics

HIRI reports that, nationally, the home-improvement products market continues to outperform many other sectors of the economy. At the organization’s 2018 Industry Insights Conference last fall, experts in the sector shared what they felt were some prevailing trends heading into 2019. Among them:

• DIYers are more likely to be Millennials, which may have to do with that generation’s connection to devices. “DIYers spend more than 60 hours per week on TV and digital devices, including computers and smartphones,” Peter Katsingris, senior vice president of insights at Neilsen, told conference attendees, according to Forbes. “The technology and the choices it provides make DIY a realistic option for people.”

• More than one-third of homeowners who completed a home-improvement project in the past year regret not spending more on the project.

• The rental housing market is on the rise. A wave of growth has increased the number and share of rental households in the U.S., especially higher-end rentals in urban areas. This reality could lead to greater interest in portable and free-standing home-improvement products tenants can take with them when they move, as opposed to permanent fixtures.

• With home wellness on the rise, the lighting industry has been coming up with intriguing options. A technology known as circadian rhythm lighting is one rising trend, producing indoor illumination that more closely matches natural light in its warmth and, paired with home automation, can shift through the day with the sun to ease the impact of artificial light on the human body.

• Finally, remodeling activity isn’t slowing down anytime soon, due in part to an aging housing stock. With home prices increasing and new construction harder to find in some areas of the country, people are staying put and remodeling. “With the existing house stock averaging 38 years old, much of the inventory is in need of updating,” Mark Boud, senior vice president and chief economist at Hanley Wood/Metrostudy, told the conference.

That aging stock is an especially relevant reality in Western Mass., but so is another trend boosting the remodeling market: an increasing desire among Baby Boomers to age in place.

This recent remodeling project by Kitchens by Curio

This recent remodeling project by Kitchens by Curio reflects some current trends in kitchens, particularly its color palette dominated by white and grey.

“We’re seeing more aging in place, and we’re seeing that as a reason people are making changes,” said Lori Loughlin, manager of Frank Webb Home in Springfield. “They’re doing what they can to make sure they stay in their homes as long as possible because they feel like it’s a better option.”

In some cases, that means installing mobility and safety equipment, but in others, it means building in-law suites, or even moving to — by either building or remodeling — a smaller house.

“We’re getting phone calls now for people looking to to downsize,” Chapdelaine said. “I think the Baby Boomers are going to be looking for that smaller house and aging in place.”

Style Points

As for interior styles, those haven’t shifted much over the past couple of years. Painted cabinetry finishes and color palettes dominated by white and grey are still popular in kitchens and bathrooms, Nataloni told BusinessWest. “I just did a process of cherry wood with a black finish rubbed off, and the cherry comes through the black. It’s spectacular, actually.”

Styles change, he noted, but they don’t change abruptly. “White is very popular, grey is popular, but we are starting to see other colors, hints of yellow and green, coming in. I’ll be doing a yellow kitchen — not school-bus yellow, a very pale yellow, but a very warm color.”

“We’re seeing more aging in place, and we’re seeing that as a reason people are making changes. They’re doing what they can to make sure they stay in their homes as long as possible because they feel like it’s a better option.”

Chapdelaine reported similar, gradual movement toward color, but mainly pastels and muted colors, not too much that would be characterized as bold. “We’re still seeing a lot of white cabinetry and floors stained a number of different colors. With surfaces, we’re still running strong in quartz — some granites, but mainly quartz.”

The most important trend, of course, is that the home-improvement business as a whole remains strong.

“We’re seeing everything from full bathroom jobs to kitchens with the walls removed, right up to additions, which are ranging from family rooms to master suites,” he said. “We’re seeing more whole-house updates — painting, hardwood floors, that kind of work — and we’re also seeing whole-house remodels, which is very similar to building a house. You’re gutting the house down to the bare studs, going through and doing a new bathroom, new kitchen, new flooring, new drywall, which is kind of nice.”

He expects spring to bring its usual rush of customer inquiries as the weather continues to improve, but said people looking to get into the queue for the spring should really be calling in February and March.

Nataloni agrees, and says he appreciates the fact that, with the economy performing fairly well, homeowners are investing more money in their living space, whether they plan to stay there for a long time or improve the house’s dated look in preparation to sell it.

“We have a lot of older housing stock around here,” he said. “Wherever you go, you see someone working on their house.”

Joseph Bednar can be reached at [email protected]

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