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
Feb 21, 2025 - Builders Rank Top Headwinds for 2025
- Except for inflation, which some builders expect to improve this year, the challenges most builders foresee for 2025 are much the same as the ones they faced in 2024, according to a recent survey by the National Association of Home Builders (NAHB). More than three-quarters (78%) of builders said high interest rates will likely be the key problem they face in 2025, down from 91% in 2024. Other significant issues builders expect to face this year include buyers pausing purchases as they wait for interest rates and prices to drop (74% of respondents), cost and availability of developed lots (65%), building materials prices (64%), and cost and availability of labor (64%).
- Demand for building design services improved in January over the prior month, but architectural billings remain soft, according to a February report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 45.6 in January from December’s reading of 44.6. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries fell to 51.4 in January compared to 51.6 in December, but the index for the value of new design contracts increased from 45.6 to 46.2. The AIA’s Chief Economist, Kermit Baker said, “Stubborn inflation, persistently high interest rates, and labor concerns continue to weigh on the willingness of owners and developers to move ahead with construction projects. Architecture firms have been moving to right-size their operations in response to softer market conditions. There was a net loss of 1,400 positions at architecture firms nationally in 2024, and firm employment has declined by a total of 4,100 positions since the post-pandemic peak in June 2023.”
- 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.
- Nearly one-third (30%) of small businesses are worried that tariffs could result in revenue losses, according to a survey released in February by Alignable, a social media outlet for small business owners. About 18% of business owners believe tariffs could boost their revenue, and 40% think they will have no effect; 12% of respondents were unsure what effects tariffs might have on their businesses. However, concerns about tariffs possibly hurting revenue varies by industry. At 48%, architecture and design firms were most concerned about declining revenue.
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