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Take Five: Signposts on the Way Out of Recession

By Robert Ivy, FAIA
AIA EVP/Chief Executive Officer

“5.8 percent. That’s the estimate of total nonresidential construction growth,” says Kermit Baker, Hon. AIA.

During a period in which the general economy has hovered in the 2.6 percent growth range, and our communities have so much work to make up for in architecture, design, and construction, 5.8 percent growth may seem restrained. However, as we architects step up and out of the worst recession in our memory, it holds promise.

Baker will be the first to tell you that he has no crystal ball. As the AIA’s chief economist, we constantly turn to Kermit for prognostications, predictions, and trends, often during times of change—like now, the beginning of another year. Thankfully, his forecasts rely not on tea leaves but on hard facts and respected resources—including construction consensus forecasts—because for 2014 the economic outlook points modestly up.

You are probably aware that the ABI, the Architectural Billing Index has been on an upward trajectory. Despite inherent volatility from month to month (December was decidedly down, for example), the general trend has been positive, indicating that you, the architect, are billing more. For the first time since the beginning of the Great Recession, many firms report that backlogs of work are beginning to increase, depending, of course, on certain factors in this changeable marketplace.

Geography plays an important role in your prospects, with New England, for example, reporting slower growth than the Sunbelt. Market sector defines another key determinant in the mix: The residential marketplace is already rebounding beyond expectations, both for single- and multi-family housing. For many architects small and large, the primary drivers of growth include institutional projects, with real uplift from the medical and education sectors, while commercial and industrial projects are lagging behind.

What does this growth portend for us? Ask an architect at a cocktail party and she might say that talent has emerged as a critical challenge for 2014, in light of an expanding portfolio of projects to accomplish. And if we believe the numbers that Baker proposes, with that 5.8 percent projected growth we can extrapolate from growth to human resources. With a backlog of projects in the queue, firms will need the best and brightest again to bring those projects to fruition.

Ironically, to date, as the economy has been improving, the job market has continued to lag. While architectural firms lost significant numbers of employees to recessionary pressures, we have recouped far fewer jobs than we might have expected. Out of 60,000 jobs lost during the recessionary funk, we have regained only an astonishing 3,000, according to Baker. Rightsizing? Did soul-searching during the recession result in a leaner profile for most firms? Apparently, given the employment figures. We are emerging with smaller companies—perhaps savvier and more technologically astute but nevertheless smaller. What are the implications for your own company or your own work?

What can you, the practitioner, do as a result of the economic forecasts? Can this knowledge help you plan for a more successful 2014? I make no pretense to being a substitute for the expert. First, expand your awareness by reading Baker’s more complete exegesis in the January issue of Architect magazine. And arm yourself with knowledge from seminars such as Baker’s forthcoming quarterly economic outlook videos that will be featured in future issues of AIArchitect.

Then, in the words of the late AIA Gold Medalist Samuel Mockbee, “Proceed and be bold.” The economic sine curve is following its inexorable path northward, pointing to an even more robust 2015. How will you meet pent-up demand of the marketplace? How will you address the fresh internal demands of the workforce? Will you diversify or merge your way to prosperity?

Kermit Baker and other leaders are pointing out a long-awaited fact: The design and construction marketplace is growing again, even if in fitful but unavoidable ways. Will you be ready? And can we prepare ourselves for sustainable practices with new models for working that are as creative as our own design work?

Like our commitment to health, safety, and welfare, we need to build the foundations for a profession that can weather prosperity and adversity by finding well-balanced paths to practice that reflect our innovation and standards of care. If clients deserve it, we architects do as well. 5.8 percent.

Robert Ivy, FAIA

Photo: ©Vincent Ricardel




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