Revenue for architects and engineers in the New York-New Jersey region rose just over 20% in 2014, according to the ENR New York survey of Top Design Firms.
The top 100 firms in this year's ranking had $4.7 billion in aggregate regional revenue, up from the $3.9 billion that the group posted for calendar year 2013 in last year's survey.
In part, the rise in revenue reflects an uptick in merger and acquisition activity for design firms working in the region. That activity factored significantly in the revenue of the list's top three firms.
Different firms have different reasons for engaging in acquisition transactions, but in general it is an indication that a company sees enough economic strength to take advantage of the opportunity to move into a new region or market sector, according to Kermit Baker, chief economist for the American Institute of Architects.
AECOM, which retained its top spot in the ranking with regional revenue of $595 million, completed its $6-billion acquisition of URS Corp. in October 2014 and earlier in the year closed on its purchase of Hunt Construction.
Those acquisitions propelled AECOM far ahead of its second-ranked peer, WSP | Parsons Brinckerhoff, which itself is the result of a combination that also took place last October. The firm reported $274 million in regional revenue. ARCADIS ranked third, with regional revenue of $225 million, benefitting from its purchase of architect Callison. It bought architecture firm RTKL in 2007.
Other top firms participating in the survey also raised the bar. Fourth-ranked STV had $183 million in 2014 revenue compared with $115 million the previous year, moving it up from seventh place on last year's list. HNTB Corp. increased its total and was ranked fifth this year, up from sixth, booking $147 million in regional revenue compared with $118 million in 2013.
M&A activity aside, the New York region saw strong market growth last year, particularly in the Big Apple real estate sector.
High-End Towers Hot
"New York City is stronger than it has ever been," says Richard Anderson, president of the New York Building Congress. Construction activity hit $36 billion in 2014 for the first time, a number that he says accounts for more than one-third of activity for the region. "Back in October, our forecast was $32 billion. It surged past that on the back of the high-end residential sector, but all sectors did well," Anderson says.
A few years ago, the high-end residential sector was only about 5% of the market, but that niche has tripled more recently, says the Building Congress. Between 2013 and 2014, it grew from $7 billion to $12 billion.
Demand for high-end residential buildings "is coming from around the world, and there is seemingly no end to it," Anderson says. "The question is when and where are we going to see the slowdown."