Architectural Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 21,100 architectural services firms in the US are responsible for designing places for people to live, work, worship, learn and play. 83% of firms have nine or fewer employees. Most firms gain a significant portion of their revenue (about 81% on average) from non-residential services.
Technology Levels the Playing Field
Building Information Modeling, or BIM, has become the industry standard for projects of all sizes, because it facilitates the communication of design and construction plans across all project participants.
Green Building Supports New Development
The government has helped fuel the green building surge by providing a variety of incentives for firms and contractors who build with energy efficiency and use renewable energy.
Industry size & Structure
The average architectural firm has about 10 employees and generates $2.4 million in annual revenue.
- The industry has 21,100 firms with $51.4 billion in annual revenue and 206,200 employees.
- Sole employee firms tend to work from home-based offices in order to defray overhead expenses. Most other small to medium firms work from leased office space.
- The industry is highly fragmented with the 50 largest firms representing just 19% of industry revenue.
- Large firms in the US include HOK, William Rawn Associates, and Skidmore, Owings and Merrill (SOM).
Industry Forecast
Architectural Services Industry Growth
Recent Developments
Jan 22, 2025 - Largest US Apartment Operator Opens Modular Complex
- In December 2024, Greystar Real Estate Partners – the largest apartment owner in the country – opened a six-building, 312-unit complex assembled using modular construction methods, according to The Wall Street Journal. The development – called “Ltd. Findlay” – near Pittsburgh is Greystar’s first modular apartment project, as the company hopes the alternative method can speed construction in an industry often mired by delays. The project was built at Greystar’s factory in Knox, Pennsylvania, and the firm has six other modular projects in the works. Modular housing is built in factories and assembled on-site, which proponents suggest reduces construction time and labor and materials costs. While modular housing remains a small part of the overall market, it is gaining ground amid a shrinking construction labor force and rising costs.
- After posting solid gains in 2023 and 2024, construction spending for nonresidential buildings is expected to slow significantly in 2025 and 2026, according to the American Institute of Architects’ (AIA) Consensus Construction Forecast released in January. Total spending for nonresidential building construction increased by 20% in 2023 and another 6% in 2024 but is forecast to slip to 2.2% in 2025 and 2.6% in 2026. For the next two years, growth will be led by data centers, which should support modest office construction in an otherwise challenging market. The warehouse sector is oversupplied, which will limit spending growth. Spending on institutional projects should remain stable as they are less susceptible to cyclical factors. AIA Chief Economist Kermit Baker said, “The modest outlook is partly based on a few expected headwinds to building activity, including potential tariffs on imports. There is also policy concern around how the construction labor force might be impacted by emerging immigration policy. Construction sector spending has been exceedingly strong – albeit unusually unbalanced – and coupled with these headwinds the projections are only very modest gains the next two years.”
- The Dodge Momentum Index (DMI) increased 10.2% in December 2024 to 212 (2000=100), up from the revised November reading of 192.3. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component improved by 14.2%, and the institutional portion increased by 2.5%. Dodge’s associate director of forecasting, Sarah Martin, said, “Commercial activity rebounded strongly in December, thanks to a re-acceleration in data center and warehouse planning activity. Overall, the strong performance of the Momentum Index this past year is expected to support nonresidential construction spending throughout 2025.”
- High office vacancies have pushed down property valuations, making office to residential conversions more economical, according to The Wall Street Journal. A housing shortage and a glut of office supply made conversions seem like an obvious solution to both problems. However, until recently, conversion project economics were challenging to pencil out, even for an aging office building. That is changing as plummeting values for older office buildings in second-tier locations are prompting owners to take what they can get, making conversions more economically viable. According to real estate firm CBRE, there have been 73 US conversion projects so far in 2024, up from 63 in all of 2023. There are about 309 office conversions in the planning stages, and about 75% of them are office to residential. In all, about 38,000 housing units are in the pipeline.
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