Regional Design Work Remains Steady Even as Fees Tighten, Uncertainties Rise
The West continues to outperform most other regions in terms of population growth, economic stability and demand for construction and design services. Market strengths include hospitality, health care, housing and offices.
“We see multifamily housing staying strong throughout 2019 and into 2020 as developers and city leaders work to provide housing for our growing city and state,” says Becky Hawkins, CEO and founding partner, Method Studio, Salt Lake City. “We also see growth in the health care market sectors, with a specific focus on assisted-living and in projects that serve the 60-plus population.”
Along with that commercial strength comes an ongoing need for better infrastructure across the region.
“Our industry is seeing significant growth in many public-sector markets, ranging from local, state and national government agencies,” says C. Benjamin Nelson, principal and structural department manager with Martin/Martin Inc., Lakewood, Colo. “These entities are focusing on the need for infrastructure improvements and building upgrades to meet the growing demand for flexible and sustainable workplaces and public spaces.”
The infrastructure boom is evident in the number of megaprojects underway, including upgrades to Interstates 70 and 25 in Colorado, a major freeway expansion through the I-15 technology corridor in Utah, improvements on I-90 in northern Idaho and key segments of I-90 in Montana, and the I-94-Sheyenne Street interchange in Fargo, N.D.
There’s also the new Utah State Prison and ongoing multibillion-dollar upgrades at both the Salt Lake and Denver airports.
But, as in the recent past, the growth has forced most design firms, like their contractor partners, to scramble for enough qualified people to do the work. “Finding and attracting the best people who provide the right fit into our culture of high performance and excellence in engineering is the number one challenge we are facing in 2019,” says David Wesemann, president and principal electrical engineer, Spectrum Engineers, Salt Lake City.
Many designers are also being pushed by owners to lower their fees despite the high volume of work. Hawkins says one of her firm’s biggest challenges is “delivering work efficiently on tightening fees and schedules while still providing innovative, inspiring projects and design.”
There’s also ongoing anxiety among design leaders that the markets will soften in the face of more tariffs and political turmoil. AIA’s April Architectural Billings Index (ABI) struggled to stay in positive territory, with a score of 50.5, up from March’s total of 47.8. Any score above 50 indicates an increase in design billings.
“In contrast to 2018, conditions throughout the construction sector recently have become more unsettled,” said AIA chief economist Kermit Baker in the ABI report. “Though we may not be at a critical inflection point, the next several months of billing data will be indicative of the health of the industry going into 2020.”