Interior Design 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 15,200 interior design firms in the US plan, design, and administer projects in interior spaces to meet the physical and aesthetic needs of customers. Revenue comes primarily from design services and product sales. Companies may specialize in a particular sector (hospitality, health care, institutional, residential), room (kitchens, bathrooms, closets), or style (contemporary, traditional).
Demand Driven By Construction Trends
Interior design services are often tied to new construction and remodeling projects.
Design Driven By Trends And Fads
The interior design market is often driven by styles and trends in the fashion world.
Industry size & Structure
The average interior design service provider operates out of a single location, employs 3-4 workers, and generates about $1.3 million annually.
- The interior design services industry consists of about 15,200 companies that employ about 55,000 workers and generate $19.3 billion annually.
- The industry is highly fragmented; the top 50 firms account for 15% of industry sales.
- Large companies that offer interior design as part of a portfolio of services include Gensler, HOK, and Perkins+Will. The majority of firms are small, independent companies with localized operations.
Industry Forecast
Interior Design Services Industry Growth
Recent Developments
Sep 25, 2024 - Home Centers to Benefit from Fed Rate Cut
- At its meeting in September, the Federal Reserve voted to reduce interest rates by half a percentage point, which would put the benchmark federal funds rate between 4.75% and 5%, according to The Wall Street Journal. Projections of fed officials’ moves suggest another four quarter-point cuts will come next year, which would bring the federal funds rate down to 3.5% by the end of 2025. Home-improvement retailers will benefit if lower interest rates translate into increased remodeling spending, according to Business Insider. Home Depot and Lowe’s have seen their fortunes erode as high interest rates have prompted homeowners to postpone big-ticket projects. High interest rates have also curtailed existing home sales, which are a key driver of remodeling and interior design demand.
- Demand for building design services declined in August compared to the prior month, marking continued softness for architectural billings, according to a September report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) declined to 45.7 in August from July’s reading of 48.2. Any reading of 50 or more indicates growth in architectural billings. August was the nineteenth consecutive month to see a downward trend in billings. The score for new project inquiries was flat at 52.4 in August, but the index for the value of new design contracts increased from 46.5 to 47.3. The AIA’s Chief Economist, Kermit Baker said, “Unfortunately, even the impending interest rate cuts didn’t move the needle on project inquiries or new design contracts at architecture firms. Hopefully, once the trajectory of further cuts gets clarified, delayed projects will restart, and new projects will gather momentum.
- Sales of existing US homes decreased by 2.5% in August from July and were down 4.2% year-over-year, according to the National Association of Realtors (NAR). Median existing home prices moderated from July’s all-time high, but August’s median home price rose 3.1% to $416,700 compared to August 2023. NAR chief economist Lawrence Yun said, “Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months.” Existing home sales are a bellwether for interior design services demand as homeowners make improvements before putting homes on the market and buyers freshen designs before moving in.
- The recent What Home Buyers Really Want Study by the National Association of Home Builders highlights kitchen and bathroom features most attractive to prospective home buyers. Study participants were given a list of 28 kitchen and 18 bathroom features and were asked to rate each as essential, desirable, indifferent, or do not want. Top kitchen features include walk-in pantries (80% of buyers ranking desirable or essential), table space for eating (80%), double sinks (78%), drinking water filtration (75%), pull-out shelves (74%), and central island (74%). The leading bathroom features include both shower and tub in the primary bath (78% of buyers ranking desirable or essential), linen closet in the primary bath (76%), private toilet compartment in primary bath (70%), double vanity in primary bath (67%), white toilet tub and sink (67%), ceramic wall tiles (65%), and granite vanity (64%).
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