Despite facing a litany of market impediments—the still-sluggish economy, construction labor shortages, the slow-to-recover education and healthcare markets—the majority of AEC firms saw revenues grow in 2015, and an even greater number expect earnings to rise in 2016, according to a survey of 337 AEC professionals by Building Design+Construction.
Nearly six out of 10 survey respondents (56.7%) indicated that revenues had increased at their firms in 2015, and 59.9% expect income from nonresidential building work to rise this year. This represents a slight uptick from 2014’s survey, when 54.4% reported higher revenue for the year.
About half of the respondents (45.7%) rated their firm’s 2015 business year as either “excellent” or “very good,” and just 2.1% said it was a “poor” year. Looking to 2016, 52.7% believe it will be “excellent” or “very good” from a revenue standpoint. Nearly three-quarters (71.4%) rated the overall health of their firm either “very good” or “good.”
Asked to rate their firm’s top business development tactics for 2016, strategic hiring (56.7% rated it as a top tactic for growth), marketing/public relations (54.6%), and technology upgrades (49.3%) topped the list. Other popular growth strategies include staff training/education (41.8%), a new service/business opportunity (32.9%), and a firm merger/acquisition (13.4%).
Among the top concerns for AEC firms are competition from other firms (58.2% ranked it as a top-three concern), general economic conditions (50.4%), managing cash flow (30.3%), and softness in fees/bids (27.6%).
HEALTHCARE SECTOR starting to REBOUND
Respondents were asked to rate their firms’ prospects in specific construction sectors on a five-point scale from “excellent” to “very weak.” Among the findings:
The multifamily boom continues, as the Millennials and Baby Boomers gravitate to rental housing and an urban lifestyle. Multifamily ranked as the most active sector, with 69.7% of respondents rating it in the good/excellent category, up from 62.3% last year and 56.1% in 2013.
The healthcare market is starting to stabilize and grow, as hospitals and healthcare providers adjust to the post-Affordable Care Act world. The sector ranked as the second most active; 68.0% gave it a good/excellent rating, up from 63.6% in 2014 and 62.5% the previous year.
Other active sectors include senior/assisted living (63.1% rated it in the good/excellent category), office interiors/fitouts (62.4%), data centers/mission critical (59.3%), higher education (48.6%), industrial/warehouse (46.7%), retail (44.9%), and government/military (42.5%).
Respondents to the BD+C survey include architect/designers (52.2%), engineers (19.6%), contractors (18.4%), consultants (5.0%), owner/developers (1.2%), and facility managers (1.0%).
BIM/VDC TAKES HOLD
The adoption of building information modeling and virtual design and construction tools and processes continues to grow in the AEC marketplace. More than eight in 10 respondents (82.1%) said their firm uses BIM/VDC tools on at least some of its projects, up from 80.0% in 2014 and 77.3% in 2013. About a fifth (20.3%) said their firm uses BIM/VDC on more than 75% of projects, up from 17.3% last year and 12.2% in 2013.
Respondents to the BD+C survey include architect/designers (52.2%), engineers (19.6%), contractors (18.4%), consultants (5.0%), owner/developers (1.2%), and facility managers (1.0%).
Related Stories
Industry Research | Apr 7, 2016
CBRE provides latest insight into healthcare real estate investors’ strategies
Survey respondents are targeting smaller acquisitions, at a time when market cap rates are narrowing for different product types.
Market Data | Apr 4, 2016
ABC: Nonresidential spending slip in February no cause for alarm
Spending in the nonresidential sector totaled $690.3 billion on a seasonally adjusted, annualized basis in February. The figure is a step back but still significantly higher than one year ago.
Market Data | Mar 30, 2016
10 trends for commercial real estate: JLL report
The report looks at global threats and opportunities, and how CRE firms are managing their expectations for growth.
Market Data | Mar 23, 2016
AIA: Modest expansion for Architecture Billings Index
Business conditions softening most in Midwest in recent months.
Retail Centers | Mar 16, 2016
Food and technology will help tomorrow’s malls survive, says CallisonRTKL
CallisonRTKL foresees future retail centers as hubs with live/work/play components.
Market Data | Mar 6, 2016
Real estate execs measure success by how well they manage ‘talent,’ costs, and growth
A new CBRE survey finds more companies leaning toward “smarter” workspaces.
Market Data | Mar 1, 2016
ABC: Nonresidential spending regains momentum in January
Nonresidential construction spending expanded 2.5% on a monthly basis and 12.3% on a yearly basis, totaling $701.9 billion. Spending increased in January in 10 of 16 nonresidential construction sectors.
Market Data | Mar 1, 2016
Leopardo releases 2016 Construction Economics Report
This year’s report shows that spending in 2015 reached the highest level since the Great Recession. Total spending on U.S. construction grew 10.5% to $1.1 trillion, the largest year-over-year gain since 2007.
Market Data | Feb 26, 2016
JLL upbeat about construction through 2016
Its latest report cautions about ongoing cost increases related to finding skilled laborers.
Market Data | Feb 17, 2016
AIA reports slight contraction in Architecture Billings Index
Multifamily residential sector improving after sluggish 2015.
