U.S. Ceilings Market 2024-2033

Commercial Building Construction is Rebounding

This industry study analyzes the $2.5 billion US ceilings industry. It presents historical demand data (2013, 2018, and 2023) and forecasts (2028 and 2033) by product (ceiling tiles, suspension systems, specialty products) and market (residential, nonresidential. Annual historical data and forecasts are also provided from 2020 to 2027. The study also evaluates company market share and competitive analysis on industry competitors including Armstrong World Industries, Knauf (USG), Saint-Gobain (CertainTeed), and ROCKWOOL (Rockfon).

US demand for ceiling products is forecast to rise 2.1% per year to $2.7 billion, reaching 1.6 billion square feet in 2028. This rate of growth will represent a deceleration as ceiling product prices moderate from a high base caused by supply chain disruptions and high raw material costs. Growth will be derived from a rebound in area demand as:

• commercial building construction improves following a poor pandemic-related performance
• increasing concerns over aesthetics and sound control in building spaces encourage the use of ceiling products in structures that did not previously have them

Market value will be supported by the increasing use of higher value products such as high noise reduction coefficient (NRC) tile and tiles made from metal or wood.

Improving Commercial Building Market Drives Gains

The commercial building market - by far the larger of the two ceiling product markets - will drive demand gains as commercial building construction improves after pandemic related weakness:

• Office construction will increase as employees continue to return to offices full-time or in a hybrid format. For building owners with vacancies, renovations (including the replacement or installation of ceiling products) will allow them to compete in what has remained a difficult market for existing office space.
• The construction of hotels and other types of lodging will rise as travel and tourism surpass pre-pandemic levels. Market value for ceilings will also be supported by the increasing use of higher value ceiling products - such as wood or metal tile - to impart an upscale aesthetic to attract customers.
• Healthcare construction will be boosted by an increase in medical care, due in part to the US’ large aging population. Many healthcare facilities also rely on higher quality, costlier ceiling products that help to reduce noise transmission between rooms and reverberation time within rooms to improve speech intelligibility.

Open Plenum Design Offers Both Competition & Opportunities for Ceiling Products

The popularity of open plenum (or open deck) design has served as a restraint on ceiling products, specifically ceiling tiles and suspension systems. This design trend has moved from factories and warehouses (where cost and performance dictated its usage) to a variety of commercial buildings and residential structures due to its industrial aesthetic and its functionality (e.g., greater air circulation), which have led some to prefer it to either ceiling tiles or drywall.

However, open plenum design does offer opportunities for some ceiling products, primarily clouds and baffles. These products are able to improve the acoustics in a space that uses open plenum design, an important feature for restaurants, offices, or lobbies. They can also impart a different, and perhaps more desirable, aesthetic from structures where the upper areas have been left exposed.

Historical Market Trends

The ceilings market is cyclical due to its close relationship to building construction activity, which is in itself cyclical. However, renovation activity is generally less volatile than new building construction, which helps to moderate demand swings, save for the most severe contractions in construction activity.

US ceiling product demand is heavily influenced by trends in commercial building construction, as this market accounted for 88% of all US ceiling demand in value terms in 2023. In residential applications, ceiling construction is dominated by drywall and plaster ceilings, which are excluded from the scope of this report.

Other factors that impact volume demand and market value for ceilings on a year-to-year basis include:

• building design trends, especially in the commercial sector where the look of ceilings is an important design component in markets such as restaurants and lodging establishments
• raw material prices
• residential renovation activity

In area terms, demand grew at a steady pace until the onset of the COVID-19 pandemic, which had a severe impact on commercial building construction and renovation and caused demand to decline from 2020 and 2022.

Demand by Market

Through 2028, demand for ceiling products is forecast to reach $2.7 billion with an annual growth of 2.1%. While growth in value terms will decelerate following the elevated price increases of the 2018-2023 period, demand will be supported by the ongoing shift toward higher value products. Meanwhile, growth in area terms is expected to rebound, driven by increasing commercial building construction as the effects of the COVID-19 pandemic continue to recede.

The commercial market dominates demand for ceiling products because:

• Grid and tile systems are more commonly used in commercial buildings than residential ones.
• Commercial buildings more often feature high-value specialty products such as clouds or baffles to dampen sound and add aesthetic appeal when the building has an open ceiling plan.

In the residential market, by contrast, drywall remains the dominant ceiling covering; specialty products are often too costly and impractical to use.

The residential ceiling market will decelerate significantly through 2028, restrained by a moderation in metal and wood tile prices and a slowdown in both new housing relatively slow growth in renovation activity and a decline in new housing completions. The commercial ceiling market will continue to be driven by rising construction and renovation of offices, institutional facilities, and high-end hotels.

Inflation & Pricing Trends

Pricing for ceiling products is impacted by a variety of factors, including:

• product availability, which can be affected by labor shortages and delays in production schedules
• energy costs
• transportation costs

Ceiling product prices are also affected by changes in the cost of raw materials such as metals, mineral fiber, wood, fiberglass, and plastics. Although increases in raw material prices are often passed along to consumers, ceiling manufacturers work to reduce these costs through either improved production technologies or low-cost material sourcing.

After a period of relative stability, a combination of supply chain disruptions and inflationary pressures caused a sharp increase in the cost of key materials such as mineral wool, metal, perlite, and wood starting in 2021, which in turn caused ceiling prices to surge at a double-digit rate. Prices grew rapidly again in 2022 as these issues continued to affect the industry. However, price growth slowed significantly in 2023 as supply chain issues eased and raw material costs moderated.

Through 2028, prices for ceiling products will either see growth decelerate from the 2018-2023 period or experience and outright decline:

• Average prices for ceiling tiles are projected to decline, due in part to a drop in prices for raw materials for mineral fiber ceiling tiles. Moderating raw material costs will also impact metal and wood ceiling tiles.
• Prices for clouds will be impacted by moderating metal prices.

Regulations

Regional Building Codes

Building codes affect ceiling demand, development, manufacture, and installation in a variety of ways. For example, regulations regarding permissible levels of emissions or flame resistance affect material selection, while separate regulations may govern the application of components like fasteners. Standards with the most impact on ceiling demand include those based on:

• environmental concerns, such as the recyclability of ceiling tiles
• ability to withstand seismic activity

Although there is no federal building code, most state and/or local governments enact variations of guidelines - such as the International Building Code (IBC) - published by the International Code Council (ICC). The IBC provides a set of comprehensive guidelines tailored to areas at greater risk, including regions prone to higher moisture levels or increased seismic activity, ensuring safety and resilience in diverse environmental conditions. This enables various regions to align their codes with the uniform requirements of the IBC, regardless of their specific environmental conditions.

However, adoption is far from universal, so ceiling suppliers and contractors looking to serve specific markets must be aware of which codes - and which editions of those codes - are enforced in that locality.

Environmental Factors

Indoor Air Quality

The primary indoor air quality issues associated with ceiling products include mold, mildew, VOC emissions and formaldehyde. These factors are of particular concern because they not only compromise comfort and efficiency, but also pose potential health risks to those within the building. This study discusses sound control separately; many ceiling manufacturers - as well as ceiling building codes and regulations including LEED guidelines - consider acoustics a portion of indoor air quality.

Most companies that manufacture mineral fiber ceiling tiles offer options that protect from mold and mildew. Products that can resist this growth are especially suitable for schools and hospitals, where indoor air quality is imperative to the health of young and vulnerable occupants.

To qualify for LEED credits related to indoor air quality, all ceiling components must emit minimal levels of volatile organic compounds (VOCs). Historically, Armstrong and other ceiling tile manufacturers applied a formaldehyde resin-based coat to prevent ceiling tiles from sagging. However, due to consumer concerns, they have made efforts to reduce the amount of formaldehyde in their products.