Atlantic Cities

Architecture Revenue Down 40% Since 2008

Architecture Revenue Down 40% Since 2008
Sergej Khakimullin/Shutterstock

All industries contracted during the recession, but few shrank as dramatically as architecture. Between 2008 and 2011, gross revenue at architecture firms fell from over $44 billion to $26 billion. More than 28 percent of positions disappeared.

These are some of the startling revelations to be found inside the American Institute of Architects 2012 Firm Survey, released this week. The survey compiles data from several thousand architecture firms, and its most intriguing conclusion turns out not to be that the industry has contracted, but rather how it's adapted, and what that means for the rest of us.

Architecture is dependent on construction, which is notoriously cyclical – usually three or four times more volatile than the market, says Kermit Baker, the AIA’s chief economist and a professor at the Harvard Graduate School of Design. "It’s been devastating," he says. "Construction activity has been down 50 or 60 percent – architecture has a long tradition of trying to survive the construction cycle, and it’s extremely challenging because architecture firms are by and large small- and medium-size firms."

How fragile is the architecture profession? Only ten percent of architecture firms today were around in 1970, and the percentage of firms with fewer than five employees has risen from 51 percent to 60 percent. Nearly one-fourth of architectural firms are sole practitioners.

But the highly competitive market has also encouraged innovation. The percentage of architectural firms that employ LEED-accredited professionals has doubled since 2008, from one-third of all firms to two-thirds. Baker, who helped prepare the report, says sustainable design is a way for firms to distinguish themselves in a crowded field. But it also demonstrates a larger, permanent shift toward environmental awareness.

Most of the changes reflected in another AIA report, the Home Design Trends survey, released Thursday, prove that sustainable architecture is popular not just on blogs but in buildings. Demand for energy efficiency continues go up across the board. Home theaters, on the other hand, seem to be less trendy.

Particularly in small practices, architecture firms are expanding their range, fostering talents in interior design, construction, or environmental planning. Again, this multidisciplinary shift reflects a desire to compete in a crowded market, but it also speaks to a larger trend toward "one-stop-shop" firms where clients can find everything they need. Progressives have been advocating closer contact between design professionals for ages, and the recession has made it pay off.

And this shift toward the multidisciplinary could also be true in related professions. The decline in payroll employees at architectural firms was about 20 percent, but about half of those were lost from the architecture staff, which typically makes up much less than half of an architecture firm. Where are all the out-of-work architects going? Possibly to jobs in real estate and city government. And that could be good news for everyone.

Top image: Sergej Khakimullin/Shutterstock.com

Henry Grabar is a freelance writer and a former fellow at The Atlantic Cities. He lives in New York. All posts »

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