John Glenn passed away, Donald Trump is President Elect, and developers are turning Nazi camps into luxury resorts; 2016 appears to be the year of “What just happened?”
More close to home, I have reviewed the AIA, AGC, and the Deltek reports, spoken with numerous industry professionals, and analyzed trends on the projects we are managing to conclude the following opinion: generally speaking, there continues to be skeptical optimism related to continued growth and architects feel less positive than general contractors; this makes sense since much of the design work associated with the uptick in 2016 is complete while contractors are still riding the delayed wave of new work. Companies hired more staff in 2016 than in previous years and we saw a trend of professionals changing companies at a higher rate than previous years. Many seasoned professionals are retiring and the absorption of smaller firms by larger ones, although slower than the 2015 record of 234 sales of U.S.-based A/E firms a 5.4% increase over 20141 is still occurring.
We experienced clients basing project decisions on the continued escalation of design and construction costs. We saw trends of projects increasing in both size (square feet) and programs of work (i.e. large school programs). Clients desire for risk mitigation increased and owners defaulted to the large-sized, resource rich companies. These larger firms didn’t just win the large jobs in 2016, they won jobs of all sizes; it seems significant portfolios, robust teams and the ability to quickly generate designs was the winning strategy in 2016. As the big guys continue to absorb small firms, albeit at a slower rate than the 2015 record-year, you would think they would depart from the recession mentality of chasing small projects to survive, this has not happened. Small and mid-size firms had a better year than 2015 but since June 2016 the Western Region saw a softening in the Architect Billing Index (ABI) with residential/multifamily offsetting the commercial/civic project decline.