Are architects actually feeling the effects of the economic recovery? How much have they changed their practice models in response to the downturn? As part of our 2014 What’s Next package on the state of the market, ARCHITECT conducted an informal and unscientific SurveyMonkey poll of architects in the magazine’s database. Eight-hundred-seventy-two completed the survey, and 64 percent of those respondents work for a small firm with no more than 10 employees. Here's their raw feedback:
The recovery has been lukewarm. When asked how they would rate current economic conditions, with 1 matching the depths of the recession in 2008, and 10 matching the height of the boom in 2006, respondents gave an average answer of 5.16.
But polltakers were largely optimistic about conditions in 2014. Most expected billings at their firm to increase this year relative to 2013. And a majority anticipated their firms hiring more workers in 2014, with most of those positions entry and mid-level.
Respondents picked what they thought would be the most popular growth sectors in 2014. For the “other” category, the most popular responses were overwhelmingly K-12 education and healthcare, with senior housing, retail, and historic preservation/renovation/restoration also getting mentions.
Which foreign markets will firms target in 2014? Eight-two percent of respondents said none. The most popular responses in the “other” category included Africa, South America, China, and the Middle East.
About half the respondents said their firm had pursued business strategies for offsetting the downward pressure on architectural fees. Popular responses included cutting staff and overhead, slashing the time spent on design and working drawings (using hourly rates instead of fixed fees), pursuing new sectors with better profit margins, and taking on more related work for a client to justify higher stipends.
How did architects change their practice models during the downturn? The most most effective strategy that architects said they would maintain going forward was the implementation of BIM. A lot of respondents cited conflicting results with outsourcing or new marketing efforts. Improving clients relationships was also a popular response.
Finally, we asked respondents what the phrase "the new normal" means to them, as it applies to the economy and the profession. Here are some of the most pointed responses:
"Architects need to better communicate why we are valuable and why we are necessary. We have to 'prove' our worth instead of it being something understood as a necessity in construction."
"The new normal is Duckspeak from Washington designed to lower the economic expectations and personal aspirations of the citizens. It means fewer, smaller projects on longer timelines."
"The new normal is not an acceptable position for architects. It is up to us as individuals and as a profession to educate everyone as to the value we bring to a project and to prove that value to our clientele and the public at large. It should not be a burden shared ONLY by the AIA, but also by all of us that practice."
"The new normal for architecture professionals involves the rapid interconnection between various disciplines like construction management, real estate development, branding, marketing. Architects will benefit from becoming more like 'hybrid professionals,' by adopting multiple business models into their practices."
"Having been in the business for over 50 years, I don't see any new normal. Just a recycling of previous markets. Single-family residences until the boom passes, then multi-family, then small commercial, then back to single family all over again."
"There seems to be a widening gap between architecture as an art and architecture as a profession, just as there is a widening gap between the haves and have-nots in our society. As that gap becomes harder and harder to bridge, the downward pressure on fees also becomes stronger, architectural services are viewed as a commodity with little appreciation of the difference between mediocre and excellent design. The push for out-of-the-box, soup-to-nuts services contributes to that. If you're buying a building like you would buy a car or a lawn mower, you expect it to work generically, but you don't expect it to address your specific organization's needs. That is where architecture seems to be heading. Where the profession, with the assistance of the AIA, used to fight that trend (opposing preapproved school plans by the state Board of Education, for instance), it seems like we've now jumped on that bandwagon. Whether that's good or bad is open for debate."
"New normal means finding effective, viable was to help clients identify how their badly needed projects can be realigned ... Our phones have been ringing off the hook for 2-3 years, and we actually compete less and less against our colleagues. We are selected for 3 of every 5 public projects, thus references and performance. Our marketing established value though trust. Fees are rarely and issue."
"I think only the big and the small will survive, and we will see more mergers of firms. The real question is will the mid-sized firm be wiped out before the economy turns so that big firms don't need to pursue the 'small' work as much, which forces the mid-sized firm out of the market. (I think the answer is that we will not revert to old ways again.) I also think that more and more architects are headed out of the industry, either forced out by lack of work and don't want to return, or a general lack of appreciation for architects will continue to drive billing rates down. Young architects will seek work elsewhere, such as in industrial design or graphics."
"The new normal is the present state of affairs which includes that situation of repeat clients vanishing without warning and without shortcomings on the part of the architect. Treat familiar clients as if you had just met, and do not lose whatever edge you have. Be assertive about your expertise if the search for expertise is what brought your client to you."
"The new normal means our fees will be more aggressively negotiated. With more competition for every project, the biggest separation between firms is how low can you go with your fees. The constantly changing 'green' aspects of design will require more time and effort to continually update details, design principals, and documentation standards requiring more overhead costs."
"Continuing downward pressure on fees, poor understanding by clients about value of services and market differentiation between architectural practitioners and why good design matters."
"New normal is the old normal, which is the average over the last 20 years. We are approaching that mean value."
"The race will go to the small, experienced, talented micro-practices. The computer, new programs, and cloud have allowed small practices that are design oriented to compete for larger projects with larger firms who must leverage labor, not necessarily talent."
"As with other post recession periods, the clients are taking advantage of the profession in buying services at reduced fees, while maintaining expectations/demands and not acknowledging the cost impact of start and stop scheduling. Projection: 3 years before market corrects on fees."
For more on the future of the market, click here.