After recessionary declines, improved construction markets will revive revenue.
Los Angeles, CA (PRWEB) June 19, 2013
The Architects industry derives the bulk of its revenue from nonresidential building design. Only a small share of revenue is generated from contracts in the housing construction market; however, many small, regionally-based contractors rely on the residential real estate market. Revenue is generated from fee-based contracts from preplanning and design services for construction and building projects. In the five years to 2013, IBISWorld estimates that industry revenue will decrease at an average annual rate of 5.6% to $34.1 billion. Industry growth was dramatically affected by the recession, as it resulted in a deteriorating construction market and a decline in the number of building projects being planned. Furthermore, business bankruptcies and prerecession overbuilding caused an oversupply of commercial and industrial real estate.
Nevertheless, the construction market has recently shown signs of recovery. As a result, revenue for the Architects industry is expected to increase in 2013, as the value of residential construction is expected to rise as well. In addition, profit margins are expected to increase to 7.5% of revenue in 2013, up from a postrecession low of 2.8% in 2010. Still, profit margins remain below the 8.5% of revenue from 2008. To maintain margins, many large firms have taken cost-cutting measures, such as laying off workers. Consequently, the number of industry employees has fallen during the past five years.
This industry is characterized by many small-scale consultants, often individual proprietors and partners, that operate in narrow geographic markets. Nevertheless, most leading firms have expanded into international markets. Many firms have also started providing more value-added products to attract clients who are looking for one-stop design and construction companies. Despite expanding geographically and increasing the number of services offered, no firm holds a dominant position in the market. Currently, the industry’s three largest players are M. Arthur Gensler Jr. & Associates, Perkins and Will and AECOM Technology Corporation.
During the five years to 2018, industry operators will continue to benefit from improvements in the downstream construction markets. The volume of construction projects will increase as access to credit becomes more readily available to clients. Demand from nonresidential and residential construction is forecast to rise during the next five years. Similarly, industry revenue is forecast to increase in the five years to 2018. Industry operators will look to offer more value-added and environmentally friendly services as the level of competition grows from one-stop, full-service building and engineering firms. For more information, visit IBISWorld’s Architects in the US industry report page.
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IBISWorld industry Report Key Topics
Architects plan and design residential, institutional, leisure, commercial and industrial buildings and structures by applying their knowledge of design, construction procedures, zoning regulations, building codes and building materials. This industry also provides drafting services, which includes drawing detailed layouts, plans and illustrations of buildings, structures and systems.
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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