Architects must be thankful to have closed the book on 2009, easily the worst year for the industry in decades. According to the Bureau of Labor Statistics, no one saw a higher rate of unemployment than architects, with the profession declining 17.8 percent. Amidst a recession driven largely by the collapse of the real estate industry, the lack of work is not surprising. But it also looks like, despite signs of recovery elsewhere, 2010 will only be less bad for architects, which is not to say good, as recent data from the AIA shows. Architects can only hope for a positive turn sometime mid-year.
Because data is limited for the architecture industry, the AIA turns to the much larger field of construction analysis. Combining information from six firms, it produces a biannual Consensus Construction Forecast, which was released yesterday. For 2010, the consensus is a disappointing 13.4 percent further decline in construction spending. That is an improvement over an estimated 20 percent decline in 2009, though both were downgraded from the midyear forecast released in July, which predicted spending would decline by 15.4 percent last year and 11.6 percent this year. “The year ended up a little worse than expected,” said AIA chief economist Kermit Baker, who prepared the forecast.
The one positive sign to come out of the report is hope of a construction recovery in 2011. The AIA forecast puts spending at a 1.8 percent gain. Based on historical data, this could mean the construction economy will turn in the second or third quarter. This translates into good news for architecture that tends to lead construction trends by 9 to 12 months, meaning a recovery for designers could come sometime this year, though likely not before the summer.
Baker said architects should take some solace from the dismal numbers because they ultimately fit the pattern analysts had been expecting. “Even a year ago, if someone would have said, ‘You know, I bet we’ll see a recovery by the third quarter,’” I think people would have thought that optimistic,” Baker said. “But here we are, with the economy improving, and architecture shouldn’t be far behind.”
Baker believes architects may have been overly optimistic about their prospects in 2009 due to the stimulus bill, which many expected to provide lots of construction dollars. It did, though mostly for infrastructure work. “We’ll be lucky to get half,” said Baker of the $35 billion trickling down to design over the next three years. “And for a $400 billion industry, even best case, this was going to be very modest.”
The AIA has been quick to trumpet improving numbers in the past, sometimes too soon. From August to October, the AIA Architecture Billings Index saw a steady increase from 41.7 to 46.1 (any measure over 50 means billings are rising, and below means they are falling). Then, in November, billings fell yet again to 42.8. Instead of an imminent recovery, it appeared the industry was stuck in much the same place it had been since it climbed out of the 30s in March.
The recovery will come faster for some than others. According to both the consensus forecast and the billings index, institutional work has remained relatively stable while commercial and residential projects have suffered. At the same time, Baker expects a quicker recovery for the latter two because they will likely produce more demand once there is a full economic recovery.
For Philadelphia firms, this appears to be true. “We’re big into amusement and recreation, substantial amounts of healthcare, and certain educational and institutional clients who seem to be fairing better,” said John Claypool, executive director of the local AIA chapter. But Claypool also has his reservations. “My sense is, we have the prospects for a steady-as-you-go year, with maybe a few hiccups,” he said. “Or we could see another year of steep drops, layoffs, and closures.”
Tom Keene, head of the Boston Society of Architects, sees a very different outlook for his colleagues. “Is it a tough time, yes?” Keene said. “But we’re doing better, and better than the consensus and the rest of the country, too. Which isn’t to say we’re rolling tin the dough here. I’m still frowning. I’m just not frowning as much.”