When interviewing firms for this issue, we were struck by their optimism and foresight. They are not in denial, nor are they disregarding danger—but the horizon they see is one that many leaders in this industry say holds significant new opportu
As I write this column the war in Iraq is winding down, the SARS epidemic is beginning to isolate itself to enable us to travel to Toronto again. Two of the major stock market indices are showing significant progress (now a 20-point difference above that of precious metals), and corporations are reporting profits that exceed analysts’ predictions. Yet interest rates are still at record lows. It has been 40 years since interest rates were at today’s levels. Can this good news last?
I think that it can and will. When interviewing firms for this issue, we were struck by their optimism and foresight. They are not in denial, nor are they disregarding danger—but the horizon they see is one that many leaders in this industry say holds significant new opportunity.
David Seiders, the Chief Economist of the National Association of Home Builders says that 3.4 million Americans will find new housing this year. In many areas of the United States there is a housing shortage which will continue to boost real estate values in all but eight of the U.S. markets. Architects working in single and multi-family housing should see a bull market that equals or exceeds that of the best years in the late 1990s. We also expect that architect-designed housing will spike up and hold this summer.
The latest Beige Book report from the Federal Reserve Bank points to improving conditions. If Congress and this administration continue to push for a major tax cut there will be hundreds of millions of dollars diverted into capital spending. Some say this could trigger a new bull market, but many economists say significant growth will occur even if the cut doesn’t materialize.
Consider that fixed expenses in many professional firms (and likely yours) is at a lower percentage of net service revenues than that of 10 years ago. Office rental rates are stable to down, and inflation has fallen to historic low levels. Today’s Barron’s magazine reports that oil prices will plunge to $20 per barrel after the regime change in Iraq is finalized. Lower energy prices, real estate rental prices, and lower fixed expenses in professional service firms all point toward new sustainable business for architects, engineers, and designers.
From the economic forecast in our January issue, the following sectors are reporting a better outlook now in May than last January. They are: Sports and Recreation, K-12 Education, Healthcare, Research and Technology, Laboratories, Libraries, Residential, Retail, and Corporate Facilities. Even Hospitality sector analysts are touting certain hotel and restaurant chains for double-digit growth later this year. We also believe that interior design, consulting engineering, environmental graphic design, and landscape architecture will have a stronger second half in 2003.
Technology remains a sleeping giant—we forecast a new phase of innovation that will permit firms to offer services faster, smarter, and better than ever before. The new building lifecycle products from Autodesk for example show that CAD and related intelligent solutions are still in early stages of what we can expect in the future. Also, wireless networking is reshaping collaborative services in our industry—for the better. We have said in past issues that it is possible for firms to grow in any market, up or down. Principals are skeptical until we show case study after case study of firms who reinvent themselves and in the process, this industry.
Yes, some firms today have downward momentum—but watch those who shift gears toward intelligent upward momentum—and respectable profits. To discover what is next, spend less time looking in the rear view mirror—new growth zones and satisfying work are just ahead.