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Business Outlook for Architecture Marketing: A Look at AIA’s Construction Outlook

This year’s AIA Conference in Washington DC took the theme of Design Connects – a title that evokes visions of promise and growth for the A/E/C industry as a whole. The conference drew architects, designers and related consultants from all over the country, and attendees got a chance to visit over 100 venues and educational sessions to earn continuing education credits. 

In the midst of the conference, the Architecture Billings Index report came out with news that after five months of positive readings, the Billings Index had fallen into negative terrain. Similar messages were reported in the Construction Outlook: Implications for Architecture Firms session that same day, presented by Kermit Baker, Chief Economist for the American Institute of Architects in Washington, D.C., and Robert Murray, Vice President, Economic Affairs for McGraw-Hill Construction.

It was no surprise to hear that the industry is still struggling; while there are signs of promise, construction spending is still bouncing along the bottom. If you are a firm owner or are responsible for the marketing and business development of an architecture firm, here are the highlights by market sector. As you read them, consider this question: What are you doing differently today to market and build business for your firm?

Residential – has seen a slight increase, but not much movement in sales. Home prices have not turned the corner yet. Prediction is for an 11% gain.

Multi-family – the one sector in residential that continues to see an uptick. Multi-family housing saw a 29% gain in units. Growth to continue in 2013 driven by the revitalization of many downtown areas, empty nesters looking to be closer to city life and young adults starting off. Apartments are outperforming condos.

Commercial – there is early-stage construction recovery in commercial, though nothing dramatic. The easing of lending standards are driving this modest sign of improvement for commercial. Construction financing is back a little, but equity is key. Will need corporate/private money to grow the market. Overall, not a great story to tell.

Offices – office alteration market continues to remain stable; data centers are up; government buildings are down.

Warehouses – Some spending is up; Amazon is spending a lot of money on new distribution centers, particularly along the southeastern US.

Institutional – publicly funded institutions are still retreating. Steep decline from 2009 – 2011 and is expected to continue a slow decline.

Hospitalitymixed growth is being seen in certain regions of the country. Particularly in areas where casino projects are driven by the Native American community.

Military – not going to be as healthy in 2013 as recent years past; will see decline.

Infrastructure – although highways and bridges are needed, funding for them will be unlikely in 2012-2013.

Public buildings – Detention, post offices, armories, police and fire – these are all benefiting from stimulus money so have not been hit as hard. Seeing slight activity in prisons and correction facilities. Of course, the GSA debacle is detracting from actual progress.

Healthcare – this sector is really being affected by the uncertainty in the political healthcare debate. However, drivers are expected with the continued growth of the elderly population, mergers, healthcare reform and VA projects for returning veterans.

Educational – will differ by sector:

K-12 – mixed future; trends to watch out for are those related to funding. Will continue to see a rise in public/private partnerships (PPPs). Consider these real-life scenarios: bar taxes paying for school athletic fields or schools selling naming rights. School districts are pulling back on schools even in cases where bond money was passed.

Higher Ed — we’ll see some spending in science-related buildings. Long-term growth is expected in 2014-2015 due to projected enrollment.

For this session attendee, the biggest news of all came in the commercial retail sector (which by the way is seeing an uptick due to consumer confidence slightly rising). It was highlighted that Macy’s in Herald Square, NYC is constructing the largest shoe department in the world. Now, there’s some construction news to take notice of.

Overall, some positive indicators are being seen, but not a boom. The long-term view—a long, extended bouncing along the bottom.

But, if a firm is going to succeed in this volatile environment, it has to be aware of the changes in these market sectosr and the dynamics that are driving them.

It’s not surprise that the Industry Outlook points to marketplace dynamics that are changing quickly.  The rain makers of today’s architecture firms must equip themselves with a full range of marketing and business development tools that can help drive their success online and offline. Waiting for an industry outlook from economists, while interesting, will not help so much in the short term.

So, what are you doing differently today to market and build business for your firm?

 

Author: Sylvia Montgomery, CPSM A Senior Partner and the head of Hinge’s A/E/C practice, Sylvia collects many shoes and wears many hats. When she’s not traveling around the country for speaking engagements or client meetings, you will find Sylvia creating marketing and branding strategies for clients, supervising her A/E/C team, developing new business, or working on her personal brand. With a 20+ year career spanning visual communications, strategy, and marketing, and over a decade working in the A/E/C sector, Sylvia brings a creative, business-focused approach to her client engagements.

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