Demand has been weak in large economies, but emerging economies are buoying growth
Los Angeles, CA (PRWEB) December 25, 2012
Revenue for the Global Architectural Services industry is expected to decline at an average rate of 2.9% to $129.2 billion in the five years to 2012. During this time, industry performance faltered, reflecting a collapse in global investment into commercial building developments. According to IBISWorld analyst Kevin Culbert, “The demand for architectural design services has been particularly weak in the world's largest economies, corresponding with the subdued growth of the United States, Japan and the European Union.” However, growth in emerging markets mitigated more severe declines. Nevertheless, industry revenue is expected to increase just 1.8% in 2012, largely due to slowing growth in China and persisting debt problems in the eurozone.
The Global Architectural Services industry has relatively high margins; however, the recession has caused profit margins to decline across developed markets. Major architecture firms have trimmed permanent staff to slow a decline in profit, causing employment to contract an average 0.7% per year over the past five years. “This industry has a highly fragmented structure,” Culbert says, “and most firms are small-scale contractors that operate within narrow regional markets or in specialized services.” There are also a number of large-scale firms capable of operating outside national boundaries, he adds. Many of the leading consulting engineering firms have been consolidating operations through mergers or strategic alliances over the past decade. These multidisciplined, multinational companies are well placed to win contracts in most markets.
The industry's predominantly localized nature means that international trade represents only a minor share of total industry activity. International activity is largely confined to the large-scale US and European design firms, and specialist architectural companies with a high-profile brand. Several of the largest firms have also merged operations with major engineering and construction companies to offer clients a one-stop shop for design, procurement and construction services. Unfortunately for industry operators, the industry has increasingly found itself in direct competition with multidisciplined engineering and building companies or government agencies that maintain an in-house architectural design capability.
Performance of the Global Architectural Services industry is expected improve over the next five years with the gradual stabilization of global investment conditions, particularly in the United States and Western Europe. The industry will benefit from an increase in global aggregate private investment and improvements in downstream construction industries. Consequently, industry revenue is forecast to grow each year on average in the five years to 2017. For more information, visit IBISWorld’s Global Architectural Services industry report page.
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IBISWorld industry Report Key Topics
This industry comprises establishments primarily engaged in planning and designing residential, institutional, leisure, commercial, and industrial buildings and structures by applying knowledge of design, construction procedures, zoning regulations, building codes and building materials.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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