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The
growing awareness of the health problems posed by toxic mold
in buildings has exploded into a broad-based concern-triggered
in no small part by recent multimillion dollar damage awards-that
has building managers taking aggressive steps to address their
indoor air quality (IAQ) problems, and has real-estate and insurance
professionals looking to a future in which innovative building
construction and product development can prevent such problems
in the first place. This growing concern about IAQ has only been
intensified by last autumn's anthrax scare, which has crystallized
the public's sense that buildings represent potentially hazardous
environments.
The response has been a boom in building inspection and remediation
activity, coupled with dramatic technological advances, ranging
from improved contaminant detection capabilities to the development
of new products manufactured from "healthy indoor materials."
Chelsea Group Ltd. (Itaska, Ill.), an IAQ consulting and market
research firm, estimates that the entire IAQ market currently
ranges between $2 billion to $3 billion annually. That
range includes the equipment side, such as air cleaners and ventilation
systems, as well as the consulting, building investigation, and
remediation side, according to Chelsea Group Chairman and CEO
George Benda.
"The big money in terms of volume is coming in the remediation
market," Benda notes. The IAQ market over the next three
to five years will "mature into a consistent building repair
market," he projects. "No matter what you do, pipes
will burst, there will be floods from storms, and these events
bring on water damage, causing mold growth. And whereas people
once relied on minimal remediation, such as drying out the buildings,
they are now taking more aggressive steps to remove the damage."
The boom in building remediation means solid, double-digit growth
for IAQ consultants and engineers, according to Anthony Worthan,
president and chief operating officer at the IAQ consulting firm
Air Quality Sciences, Inc. (AQS; Atlanta). Worthan estimates
that the consulting/investigation/remediation sector of the IAQ
market is growing at an annual rate of about 25%. The market
size and growth rate is difficult to determine precisely because
most of the players, including AQS, are privately held. "We
expect the market to show strong year-over-year growth for the
foreseeable future," says Worthan, who projects his company's
growth as tracking the sector's 25% rate. "I also think
the market will broaden in the form of new products and services,"
he adds. "New testing technology, for example, is allowing
us to turn samples around faster and detect lower levels of contaminants
in buildings."
MILLIONS FOR CLEANUPS
Toxic mold is certainly not the only contaminant of concern in
buildings. Upwards of 100 chemicals, including formaldehyde,
solvents, and pesticides, pose problems ranging from bad odors
to severe physical reactions, and even the odor problems have
prompted multimillion-dollar building cleanups. In addition,
any or all of these contaminants may be responsible for the rapidly
increasing incidence of asthma, especially among children, according
to Worthan. "There is a tremendous amount of research focused
on why asthma is increasing at such a high rate. Molds, chemicals,
and other indoor contaminants, including particles, are of major
concern to homes, schools, and businesses-not only for the occupants
of those environments, but also the insurance industry, which
pays for the building remediation, and the health professionals,
who are trying to diagnose problems and come up with an answer."
The mold threat, however, is front and center because of significant
recent judgments in favor of plaintiffs who have complained about
the negative health effects of toxic mold in their homes or places
of employment. For example, a Texas court last June awarded a
couple $32 million after ruling that the insurer mishandled
the couple's claim for water damage. A water leak in the couple's
home spawned the toxic mold stachybotrys and allegedly caused
severe neurological damage in one of the plaintiffs.
The elevated concern about toxic mold is coming just as real-estate
companies and insurance are wrestling with the consequences of
construction practices over the past two decades, according to
Chelsea Group's Benda. "Most buildings today are brittle-that
is, they're built to minimum specifications. If you don't maintain
them perfectly, you get a cascaded failure mode and they develop
problems pretty quickly. Furthermore, the service component to
maintain these very brittle buildings has been reduced."
The real-estate and insurance industries thus place mold as their
premier business risk issue for the coming decade, he adds. "The
problem is serious and widespread, but it's not a reason for
panic; it's reason for corrective action." And rather than
eclipse the toxic mold issue, the emerging bioterrorism threat
has dramatically underscored it. "Unseen biological agents,
whether purposely placed in buildings or growing as a result
of more natural phenomena, can cause harm," Benda notes.
"That's the message Americans have come away with."
AQS's Worthan notes that the bioterrorism scare has translated
into business for IAQ firms in the form of developing response
plans. "What we've seen since the September 11 attacks and
the anthrax incidents is that building managers and risk managers
are having to make sure that they have plans and procedures in
place to respond to suspicious materials. They need to know what
steps should be taken to collect samples and confirm that they
are biological agents, and then what to do throughout the building
if a threat is confirmed. That's the kind of activity we're seeing."
With double-digit growth projected over the next few years, the
IAQ market is aggressively expanding rather than consolidating,
in sharp contrast with the other environmental service sectors.
"The IAQ market is in its relative infancy," says Worthan.
"There are a lot of new entrants. Consolidation may play
a role in the future, but we have not seen it yet." The
new entrants include firms from a variety of fields, including
environmental service firms, HVAC contractors, restoration contractors,
and carpet and duct cleaners. As a result, IAQ training and certification
have also emerged as growing markets for companies like AQS.
As a measure of the market's growth, AQS has tripled its capacity
for testing indoor air and dust samples over the past six months.
The expansion did not come through acquisition but rather through
the purchase of new equipment and laboratory space and the hiring
of new technicians, according to Worthan, who acknowledges that
finding the required talent isn't easy. "Mold or mycology
expertise is a scarce resource. You have to establish relationships
with universities to get the best people, and we've been able
to do that."
AQS has been at the forefront of new technology development as
well. One thing we are quite proud of is the fact that we are
a leader in bringing new investigation and analysis tools to
the marketplace," says Worthan. "We were the first
to offer microbial VOC to the market, for example." Microbial
VOC analysis allows the detection of chemicals emitted by hidden
fungi and bacteria with less destructive building inspection
than has normally been required. AQS also has developed a chemical
dust analysis technique to build historical exposure profiles.
"This technique allows you to go back in time and determine
what occupants were exposed to months and even years ago,"
Worthan notes.
About 50% of AQS's business, however, is derived from the emerging
area of product testing, "which is what distinguishes us
in the consulting business," according to Worthan. Under
its Greenguard product certification program, AQS verifies manufacturers'
claims that their products or building materials emit little
or none of the contaminants of concern in buildings. "There's
a huge demand for this service by product specifiers and by building
architects and designers, who want to proactively minimize exposures
in new or renovated buildings."
The product testing business represents one leg of a longer-term
market that Chelsea Group's Benda refers to as the "resilient
buildings" market. "Insurance companies and building
owners are going to get a lot smarter about preventing the causes
of IAQ problems," he predicts. "The results of their
efforts are 'resilient' buildings, which bounce back quickly
from any kind of problem. They have good ventilation and good
humidity control, and they have materials that are sound and
don't off-gas or degrade easily over time." The market for
resilient buildings is in the first stage of adoption, and full
adoption of the associated technologies may take another 15 years,
Benda notes. "When it is fully adopted, it will mean a market
of $10 billion to $20 billion per year for materials and
services that are designed to make buildings resilient. And this
will be an investment with a return. All of the repair costs
going into buildings now and over the next several years, those
are just sunk costs, to repair previous investments."
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This article appeared in
Environmental
Business Journal Volume XIV No.3/4 2002
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