Revenue Gains Prompt More Market Optimism for Design Firms
Opportunities abound in health care sector, but some design firms express caution heading into a presidential election year
Southeast design firms are making the most of an improving market for their services, but some are voicing a sense of caution, with one factor cited being the uncertainty that is historically associated with a presidential election year. At the same time, other sectors, such as health care, have reenergized and may continue to generate significant business opportunities over the short and longer terms.
Based on the data that more than 100 architectural and engineering firms provided to ENR Southeast as part of its annual Top Design Firms survey, 2015 proved mostly positive for regional designers. In total, the firms participating in this year’s online survey collectively reported nearly $3.9 billion in design revenue from projects located in the four-state region of Florida, Georgia, North Carolina and South Carolina. That’s a gain of roughly $600 million, or 18%, compared with the overall total reported by last year’s respondents.
Click Here to View the 2016 Southeast Top Design Firms
Some, but not all, of the largest Southeast design firms grabbed a sizable share of that regional gain. Perennial top-ranked firm AECOM, for instance, reported a 3% decline in Southeast design revenue. But others in the top 10 earned significant year-over-year gains in 2015. No. 2-ranked Kimley-Horn, last year’s Southeast Design Firm of the Year, notched a 14.3% revenue gain last year, with No. 3-ranked Arcadis North America showing a 6.6% gain, and 4th-ranked HNTB reporting a 22.3% increase.
But year-over-year gains are evident throughout this year’s ranking. No. 21-ranked TLC Engineering for Architecture—this year’s Southeast Design Firm of the Year—saw its regional design revenue increase by 29.7% in 2015. KCI Technologies, ranked 20th, reported a 26.3% improvement, while the 26.3% gain by 16th-ranked Universal Engineering Sciences also contributed to the overall increase reported by this year’s respondents.
While previously hot markets like South Florida’s condo sector began slowing in 2015, others have picked up around the Southeast. One of the most notable was health care, which came back to life in 2015 in a big way, says Chuck Cole, president with Orlando-based architectural firm HuntonBrady.
“We had a record year in 2015,” says Cole, noting that most of the firm’s health care clients “are doing some kind of project.”
“There really has been a resurgence,” he says, adding that providers are now comfortable enough with the federal health care laws to initiate new projects. The market is now “very, very strong.”
The Southeast Design Firm of the Year, TLC Engineering for Architecture, also noted significant gains from health care assignments. Noted Michael Sheerin, president and CEO: “Many things are driving the markets in Florida, including consolidation among health care owners, which is driving the decision makers to a smaller circle, while also providing opportunities as acquired properties are brought in line with the standards of the parent company.”
Another market that may be showing signs of future strength is the commercial office sector, says David Brown, principal with tvsdesign, Atlanta.
“There’s a lot of buzz in the Southeast market,” Brown says. “Owners are trying out new things and making big, bold decisions about the spaces they need, especially when it comes to corporate office relocations.”
Brown adds that while build-to-suit office projects still dominate, “speculative development will become more favorable as developers make bold decisions and demonstrate how successful these types of developments can be.”
And while condos may be slowing, developers are still finding demand for rental apartment buildings.
“Everywhere you look in Atlanta, there’s a new high-rise, mixed-use apartment complex popping up,” Brown says. And rather than being developed as “one-off” structures, he says that most apartment projects are designed to deliver a sense of “being plugged into a community and providing the right mix of amenities that support the ideals of successful life/work/play environments.”
About the Ranking
ENR Southeast’s Top Design Firms survey ranks firms based upon 2015 design revenue generated from projects located in the four-state region of Florida, Georgia, North Carolina and South Carolina. In addition to the main ranking, ENR Southeast has published several breakout rankings, including lists based upon state revenue, market sectors and design discipline.
The main chart also includes additional information about each firm, such as their top market sectors, regional executives and their largest Southeast projects to break ground during the past year.