2023 Dimensions of Performance: Where to watch for growth

{"version":"0.3.0","atoms":[],"cards":[],"markups":[["a",["href","https:\/\/www.aia.org\/pages\/6556503-abi-october-2022-despite-slowing-billings-","target","_blank"]],["strong"],["em"],["a",["href","https:\/\/aiau.aia.org\/courses\/2023-economic-update-1","target","_blank"]]],"sections":[[1,"p",[[0,[],0,"Architecture firms are starting the new year with low expectations for revenue growth. "]]],[1,"p",[[0,[],0,"According to a recent firm "],[0,[0],1,"survey"],[0,[],0,", a third of firms expect business to grow, another third expects only to hold steady; one third anticipate a decline. Though multi-family residential firms are expecting the steepest revenue declines, institutional firms are anticipating growth about twice the overall average for the profession."]]],[1,"blockquote",[[0,[],0,"\u201cArchitecture firms are seeing a challenging business environment,\u201d said Kermit Baker, Hon. AIA, AIA\u2019s chief economist, \u201cwith higher construction costs and a weakening economy.\u201d"]]],[1,"p",[[0,[],0,"Baker says performance will be driven most by location, project type, and business sector. "]]],[1,"p",[[0,[1],1,"Location"]]],[1,"p",[[0,[],0,"Location, location, location. The most important factor in real estate is a key success indicator for architects, especially those serving clients in Texas, the Southeast, and the Mountain states, where job and economic growth is increasing the areas\u2019 populations. Driven by the decades-long influx of people leaving larger, coastal cities for more affordable areas and spurred by increased remote work opportunities born during the COVID-19 pandemic, residential projects will continue to reflect this trend. "]]],[1,"p",[[0,[1],1,"Project Type"]]],[1,"p",[[0,[],0,"A weak economy causes customers to rethink new ventures. Look, instead, for renovations, retrofits, building additions, and historic preservation, which accounts for more than half of the work firms will encounter. \u201cPart of this derives from an expanding interest in sustainability \u2013 fixing up an older building is more environmentally sensitive than tearing that building down and constructing a new one,\u201d said Baker. \u201cBut if a soft economy, high inflation, and high interest rates make more construction projects less feasible in the coming quarters, we can expect continued growth in the share of work coming from reconstruction projects, and a buffer against a more serious setback for the profession.\u201d "]]],[1,"p",[[0,[1],1,"Business Sectors "]]],[1,"p",[[0,[],0,"Travelers \u2013 taking trips for business and leisure \u2013 are back. Though hotel construction has been down for years and saw no gains in 2022, projects are on track to return to pre-pandemic levels in the new year making hospitality a popular sector for architects. Likewise, look for a boom in the health and education industry, which Baker says are key pillars of the institutional markets. After long stretches of remote learning delayed school reconstructions projects, school systems and colleges are passing plans for new buildings and major renovations across the U.S. Both projected to have relatively healthy years with growth in health care spending rising to 5.5 percent and education to 3 percent."]]],[1,"p",[[0,[2],0,"For more detailed information on the forecast and economic conditions, "],[0,[3],1,"join "],[0,[],1,"the Quarterly Economic Update on AIAU on February 2, 2023, at 2pm ET."]]],[1,"p",[]]]}