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
Mar 21, 2025 - Data Centers Prop Up Commercial Building Planning
- The Dodge Momentum Index (DMI) increased by 0.7% in February 2025 to 225.6 (2000=100), up from the revised January reading of 223.9. 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 3.3%, but institutional declined by 4.6%. Dodge’s associate director of forecasting, Sarah Martin, said, “Planning momentum moderated in February, after a few months of stronger growth. Data centers continue to prop up growth in the overall index. Without them, the DMI would have decreased by 2% this month. Increased uncertainty around material prices and fiscal policies may begin to weigh on planning decisions, but for the time being, planning activity is largely continuing to move forward.”
- Demand for building design services declined in February over the prior month amid ongoing economic uncertainty, according to a March report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) fell to 45.5 in February from January’s reading of 45.6. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 47.8 in February compared to 51.4 in January, and the index for the value of new design contracts dropped to 42 from 46.2. The AIA’s Chief Economist, Kermit Baker said, "Conditions in the broader economy were generally positive in February, with the Consumer Price Index (CPI) increasing by only a modest amount, long-term interest rates easing from January levels, and healthy job growth. However, uncertainty surrounding the impact of recently announced tariffs may lead to a rise in building material prices in the coming months while immigration policy may put even more pressure on an already undersupplied construction labor market."
- Some cities are mitigating housing shortages by converting shuttered hospitals into residential space, according to The Wall Street Journal. Because hospitals’ patient rooms often have high ceilings and individual bathrooms, they’re easier to convert into housing than office buildings. Hospitals are also usually situated near city centers and transportation hubs. Federal tax incentives for redeveloping old hospitals are helping to fuel the trend as cities struggle with housing shortages. In 2023, the 20% federal historic tax credit for eligible projects reached $225 million, according to Wall Street Journal analysis of National Trust for Historic Preservation data. Such projects are particularly attractive for rural communities as more hospitals in outlying areas close. The Center for Healthcare Quality and Payment Reform estimates that as many as 700 rural hospitals are at risk of closing.
- North American construction and engineering spending in 2025 is expected to grow by 2% after increasing an estimated 6% in 2024, according to FMI’s first-quarter 2025 North American Engineering and Construction Outlook. With growth of 19%, the data center sub-sector will lead 2025 nonresidential building construction, followed by public safety (9%), amusement and recreation (7%), and manufacturing (6%). Commercial construction spending is expected to decline 9% in 2025 amid a 6% drop in warehouse demand, which accounts for more than half of annual commercial spending. Lodging construction spending is forecast to fall 7%, and stubbornly high office vacancies are expected to hold new office construction to 2% growth in 2025. Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 4% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 13% in 2025.
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