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AIA Reports Bad Economic Numbers For Design Firms In Continuing Trend

11/12/2012 | Construction Blog

The American Institute of Architects recently released the results of its survey of economic conditions as it relates to the construction design industry. The data was not encouraging for the construction industry of Pennsylvania or New Jersey.

Since the start of the 2008 recession, architecture firms have seen their revenues drop by 40% and cut personnel by nearly a third. Even with the slight national recovery in 2009, construction activity has continued to spiral downward and affected the landscape for architectural firms.

Total construction spending fell from $1 trillion in 2008 to $800 billion in 2011, with design professional revenue falling from $44 billion to $26 billion in the same period of time. After peaking in early 2007, construction payrolls have declined steadily since. Over 28% of positions at architectural firms nationwide have disappeared in the economic downturn. This has wiped out the gain of 18% during the boom of 2003-2007 and then some.

The decrease in the need for architects has also caused architectural firms to reduce staff and, thus, employment as well. Because staff are not billable to a project, firms are cutting staff at much higher rates in an attempt to run even leaner. Non-design professional employees were at 19% in 2009 and have gone down significantly since that time.

These numbers are worth tracking.  Since design work is usually necessary in the early phase of any project, the numbers in this sector of the construction industry are a leading indicator of when the construction market will begin to pick up again.