West Coast design firms continue on an upward trajectory with robust infrastructure, transportation and sustainability-focused projects—industry niches they expect to remain vibrant into next year. But the pace of growth has slowed, particularly in California, prompting industry leaders alert for opportunities to mitigate risk.

On average, the top 25 design firms in each ENR regional zone reported an increase of 11% this year. For the Western regions (California, Northwest, Mountain States and Southwest), the average increase was 8.5%. While the top 25 firms in ENR Northwest met or exceeded those averages, the top 25 firms in ENR California fell short, and in fact showed the smallest percentage increase in revenue across all ENR regions.

The top 25 firms on ENR California’s Top Design Firm list—which includes Hawaii—reported total revenue of $5.38 billion for 2023, up 1.9% over the same group’s 2022 revenue. That continued a slowdown trend from last year, when the top 25 design firms in the region recorded an increase of 5.1%, compared with 8% in 2021.

The top 25 firms on ENR Northwest’s Top Design Firms list, however, reported a significant increase over the previous year. The group’s combined total for 2023 was $1.98 billion, a 12.1% increase over their combined 2022 revenue. While significant, that increase was still down from the 16% increase reported by the same group in 2022.

In the 2023 rankings, AECOM topped the California/Hawaii region with $836.13 million in regional revenue and was No. 7 in the Northwest, posting $84.97 million. Denise Casalino, chief growth officer for AECOM’s West region in design and consulting, attributes this success to an array of assets: talented employees and clients; training for multidisciplinary career development; and reverse mentorship programs.

Top 25 firms Revenue

Chart by ENR

Walking on a Thin Line

Casalino says that AECOM will continue to shift from traditional construction management services to progressive design-build CMGC. In this way, “Contractors are mobilized a lot earlier in the process, and projects will start earlier to reap cost savings across the board,” she says.

Project delays and the rising cost of labor and materials may not be as acute today, but they continue to be a concern for firms being careful about their bottom line. Those factors have put a premium on efficiency and risk reduction.

“The design industry is rich with opportunity.”
—Katherine Wood, Alaska Area Business Development Leader, HDR

“At national, state and local agencies, there have been many discussions about ensuring appropriate environmental review and community engagement, streamlining permitting, using new project delivery methods and accelerating timelines of projects,” says Anna Lantin, HDR’s Southern California area operations manager.

Opportunities are abundant, particularly for firms keeping abreast with sectors of the industry seeing growth. Companies with an eye on sustainability have found a host of opportunities on the West Coast, with AECOM designing the Wonderful Company Career Center office in Los Angeles, which targeted and achieved net zero energy.

“The diversity of users from the local community to in-house technical staff requires the building be adaptable to a range of activity over the life span of the building,” Casalino explains, noting that the building supports the company’s strategic vision to provide unique services in the Central Valley and provide value to the community as well as the environment.

Los Angeles Metro Regional Connector

Major transportation infrastructure efforts like the $1.9-billion Los Angeles Metro Regional Connector continue to boost the industry.
Photo courtesy LA Metro

Trouble in Paradise

Hawaii is a good example of the challenges companies across the region are facing. Right now in the state, “the design industry is quite robust, with major capital improvements and new construction projects planned or identified by the Department of Defense, state and county governmental agencies,” says Dawn Szewczyk, Hawaii and Pacific area operations manager for HDR. The firm was ranked No. 2 on ENR’s Top Design Firms list for California and Hawaii, posting $550.17 million in revenue.

Materials availability is particularly stressful in Hawaii. “Being on an island, remote from the continental U.S., is something that continually poses a challenge for construction projects due to limited materials on-island, increased shipping costs and lengthy delivery times,” Szewczyk says.

Those concerns snowball in places like Alaska where a key concern with complex and larger construction is a limited pool of contractors, resulting in higher prices or no bids, says Katherine Wood, HDR’s Alaska area business development leader. She adds that “there are also challenges with the pace and schedule of delivery to meet requirements of the IIJA.”

As welcome as the influx of federal funds into Alaska may be, it comes with its own set of headaches.

Average Firm Revenue

Chart by ENR

“The design industry is rich in opportunity,” says Wood. “There is also a lot of confusion about how clients are dealing with the influx of money. There’s a lot of confusion in smaller communities about how to advance projects when it comes to planning, permitting, design, etc.

In Alaska, the HDR team completed the $138-million Seward Highway MP 75-90 Road and Bridge Rehabilitation on Oct. 9, 2023. The highway, which opened in 1951, is the only road between Anchorage and the Kenai Peninsula. The Federal Highway Administration has listed it as an All-American Road and a National Scenic Byway.

Supply chain woes and inflationary anxiety have not gone away. AECOM’s procurement strategy is rapidly evolving in response to inflation and post-pandemic supply chain dynamics, Casalino says. “We’re observing clients proactively establishing relationships with manufacturers and centralizing and expanding their procurement capabilities. Risk is being transferred from contractors to our clients as they race to secure machinery, equipment and materials in bulk,” she says.

Wonderful Company Career Center

Sustainable projects like the zero net energy Wonderful Company Career Center office in Los Angeles are a growing niche.
Photo courtesy AECOM

Working for a Livin’

Last year, WSP expanded in California and Hawaii organically as well as through acquisitions of leading earth and environment businesses and firms in the structural, mission critical, health care and science technology markets, says Luis Porrello, senior vice president and California district lead. The company was ranked No. 4 in California and Hawaii with $502.5 million in revenue and No. 2 in the Northwest with $223 million.

In transportation, the company grew in California during the last few years by focusing on clients’ needs during and after the transformative pandemic. The firm has had a hand in some of the region’s biggest transit projects: the $1.57-billion San Francisco Municipal Transit Central Subway and the $1.9-billion Los Angeles Metro Regional Connector—ENR’s Project of the Year in 2023.

In the Pacific Northwest, design firms are seeing a steady flow of much needed projects in development, but the litany of industry challenges has tempered growth there as well.

The state of Washington has been high performing for HDR and for similar reasons. Jessica Matthews, the company’s area transportation business development leader, says, “The design industry in Washington continues to grow, fueled by robust federal funding and strong owner partnerships to address the diverse infrastructure needs of our communities.”

The company recently completed the $1-billion East Link Extension—a 14-mile extension of light rail from Seattle’s International District to downtown Redmond. However, “Like in many places, challenges related to labor shortages, the high price of materials and supply chain disruptions have moderated this growth.”

Oregon, in particular, needs infrastructure improvements and expansion, most specifically in power and transportation, says Tracy Ellwein, HDR’s Oregon area manager. In the case of the latter, the firm is leading a team for the $1.5-1.9 billion I-5 Rose Quarter Improvement Project in Portland, Ore.

“Transportation is going to be at the forefront as the state legislature pursues a new transportation package in 2025 to pay for the completion of existing projects and to build up the highway trust fund with new funding sources,” she says.