[2006 State of the Industry] Pest Control Grows as Cities Grow

The forecast for the Western and Southeastern United States is hot, hot, hot, and we’re not talking temperatures.

The top 10 fastest-growing large cities (population 100,000+) between July 2004 and July 2005 were located in California, Arizona, Nevada and Florida, according to the U.S. Census Bureau. Elk Grove, Calif., was the nation’s fastest growing city. Phoenix had the largest population increase overall.

Booming markets make for good business, agree pest management professionals, citing double-digit growth. "The housing market in the Phoenix area is really something," said Dan Galvan, Truly Nolen district manager for Northern Arizona and Utah, who anticipates opening two new offices in the next 18 months. "All the developing is just going to add to our business."

Jerry LeBlue, Western Exterminator Co. service center manager, Las Vegas, says major housing developments have helped his office grow every year for 15 years. In that time, the office has grown from three staff people to 30.

Many new Arizona and Nevada residents are former Californians fleeing high housing costs, agree pest management professionals. "They’ve sold their homes and can pay cash for one out here," LeBlue says.

In Florida, business is non-stop 12 months a year with its warm climate and imported ant problems, says Orlando’s Middleton Lawn & Pest Control CEO Greg Clendenin. He says overall sales performances are on track and he has plans to substantially increase his sales force. Massey Services Vice President Adam Jones, Maitland, Fla., has seen revenue jump nearly 17 percent company-wide. Jones says he expects to open four to five new offices by year’s end.

Construction of new homes and apartments is fueling growth. Although it has slowed in recent months, new home construction was generally strong this year. New housing starts in May rose 15.8 percent in the West and 8.5 percent in the South, compared to a mere 1.7 percent in the Northeast and a drop of 15.8 percent in the Midwest, according to the National Association of Home Builders (NAHB).

Termite treatment makes up a significant portion of sales gains in Florida and Arizona. Homes are being built on desert lands infested with termites, says Truly Nolen’s Galvan. Massey Services views pretreats as a way to gain more lucrative contracts for annual termite renewals, lawn care and general pest control, says Jones.

Middleton is "beginning to build (the pretreat) part of our business," says Clendenin, but most growth has come from sales after new homes are occupied.

In the existing home market, wood infestation inspections that are required for closing are turning into big business. Sales of existing homes in May rose 0.7 percent in the West and 0.4 percent in the South, but fell 3.8 percent in the Midwest and 4.2 percent in the Northeast, according to NAHB.

The more reports done, the more termites found, and the more business gained, Galvan adds.

Termite treatment isn’t the only money maker. Residential service for ants, spiders, rodents and silverfish makes up the bulk of growth for pest management professionals in California and Nevada. New growth comes from residential services as new housing developments are built on former farmland, says Terminix Branch Manager Mike Escobar, Sacramento. His territory covers the fast-growing suburbs between Sacramento and Stockton, which includes Elk Grove.

Rising interest rates, higher home costs and retreating speculators may soften future growth in hot markets, but pest management professionals remain optimistic.

Prospects look good throughout Florida, Jones says. "We haven’t even scratched the surface of market penetration." Clendenin agrees the market will support Middleton’s aggressive growth plan which calls for both internal growth and acquisitions.

Pest management professionals in high-growth states couldn’t agree more. Adds Galvan, "It’s a great market for us to be in right now."