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Architecture just might be this season’s Biggest Loser. The Architecture Billings Index, a gauge the American Institute of Architects uses to show the industry’s strength (or weakness), indicates that business has now been in decline for a record 28 months in a row. Moreover, in issuing its latest report today, the institute reports that May’s rating fell from the month before. The weakest area geographically is the West. By sector, it’s institutional.
In an email to me, Clark Davis, vice chairman of HOK, writes: “I believe this will be a very slow recovery in the private sector, because businesses are still very reluctant to add people—and job growth is the single largest driver in commercial real estate, design, and construction.”
Since payrolls peaked in mid-2007, the nation’s architecture firms have shed a quarter of their employees. And at least some still collecting a paycheck have too little to do, says Phil Harrison, president of Perkins + Will. “Design firms are holding onto staff, even without sufficient work to keep them busy, because staff are so valuable and there is a hope that work willl pick up,” he says in an email.
Harrison predicts the rut (or rout) will last another two years. “The combination of three factors—expensive marketing, lower fees, and excess staff—is causing many firms to operate at significantly lower levels of financial performance, which is likely unstainable,” he says.
And I thought the media biz was in bad straits.
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