It's a Fluke That Could Be a Trend: Greenfield Opens of LBM Yards Rival Purchases

LBM facilities acquired (blue pins), opened (green), or closed (red) YTD 2023. Not shown: A store opening in Alaska. Source: Webb Analytics research

The latest map of construction supply deals, openings, and closures so far in 2023 shows something unusual: A high level of greenfield openings of facilities (75) compared with the number of locations acquired (93) year to date. That's just 1.2 acquisitions per greenfield, way down from 2020, when there were 8.6 facilities purchased for every new location.

Big asterisks need to be attached to 2023's greenfield openings count, because roughly one-third of the 75 are planned openings. In contrast, we only know deals that have been announced. There may be plenty of transactions in the works that could come to light later this year.

On the other hand, that ratio fell from 8.6 in 2020 to 4.3 in 2021 and dropped further to 1.8 in 2022, so what's happening in this year's first quarter could signal a continuation of the trend. There are only so many multibranch lumberyards and specialty dealers, so every one that's sold reduces the pool. Buyable roofing/exterior companies appear to be particularly scarce: Last year, this sector had 61 greenfield openings against only 59 facility acquisitions. Lumberyards were a different story: There were just 24 greenfield openings vs. 121 facilities bought in 2022.

The 93 facilities bought so far this year came in 18 deals involving 17 buyers. Among the latest deals:

* Colony Hardware acquired New South Construction Supply, a metal and concrete specialty supplier with 13 branches.

* SiteOne Landscape Supply bought J&J Materials, a landscaping specialist with three branches in Massachusetts and two in Rhode Island.

* Cook County (MN) Home Center acquired Sawtooth Lumber of Grand Marais, MN.

* SRS Distribution bought Exteriors Inc. of Bowling Green, KY.

* ABC Supply purchased Thermal Tech Inc. of Kalispell, MT.

* Chris Amir, who owns several hardware stores in Illinois, purchased two more: Mahomet (IL) Ace Hardware and Neighborhood Ace Hardware of Gibson City, IL.

Recent openings included a Beacon branch in West Bend, WI, and Stone Center of Texas (an SRS Distribution division) in Frisco, TX;