Improvements in residential construction will revive revenue, leading to a recovery
Los Angeles, CA (PRWEB) July 08, 2013
Over the past five years, the Landscape Design industry has hit a rough patch. Landscape architects rely heavily on downstream construction markets for demand, but new housing developments and commercial construction activity diminished drastically at the onset of the economic crisis. “Smaller players and sole proprietors were particularly hard-hit because most of their revenue is derived from residential projects,” according to IBISWorld industry analyst Matthew MacFarland. While larger players were not spared, some were buoyed by the government's stimulus spending from the American Recovery and Reinvestment Act of 2009. Nonetheless, low demand caused industry revenue to fall at an annualized rate of 2.4% to $5.6 billion during the five years to 2013. As housing development, municipal and civic building and local and state government spending all turn a corner in 2013, however, industry revenue is expected to rise 4.1% during the year.
The Landscape Design industry has a particularly low level of concentration; the industry is primarily composed of small, local establishments. Landscape architecture firms are typically individual designers or small groups of creative workers. The few large-scale companies operating in the industry are primarily engineering or structural architecture companies that also condusct some landscape design. “To attract new clients among the limited number of projects available during the recession,” says MacFarland, “firms were forced to lower prices and accept smaller profit margins.” Many firms, especially sole proprietors, were unable to operate profitably and were forced to shut their doors, causing the number of firms to decline at an annualized rate of 0.9% to 38,105 companies in the five years to 2013.
In the next five years, demand for landscape designers will increase as a result of improvements in the downstream commercial, public investment and residential construction sectors. Revenue is forecast to grow in the five years to 2018, but much of this growth will be attributed to overall economic recovery. Industry revenue will still be below its prerecession peak for several years. Rising demand will allow operators more leverage to raise prices and, consequently, expand their profit margins. These increased profit margins will encourage more firms to enter, or reenter, the industry. As a result, the industry is expected to remain highly fragmented over the long term as small-scale operators compete to hold a share of local or niche markets.
For more information, visit IBISWorld’s Landscape Design in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Landscape Design industry plan and design the development of land by applying their knowledge of land characteristics, locations of buildings and structures and use of land areas to the design. Firms work on recreational areas, airports, highways, schools and land subdivisions in commercial, industrial and residential areas. This industry does not include landscape care and maintenance services, such as installing and caring for trees, lawns or gardens.
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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