Business for Sale Industry Economics
2001 - 2020
2020 - 2026
Fee-based contracts for pre-planning and design services related to architecture and building projects generate money for the architects’ industry.
Contracts relating to housing development and nonresidential building construction produce revenue for the industry, with the latter usually generating a greater share of the revenue.
The research forecasts that market sales will rise at a 2.2 percent annualized rate to $46.0 billion over the next five years.
However, industry income is forecast to fall 7.0 percent in 2020 due to a weak macroeconomic climate and a drop in building activity caused by the COVID-19 pandemic. Profit is expected to fall to 7.3% of industry sales.
The Architect industry is made up of businesses that plan and build residential and nonresidential buildings. The industry has done well in the five years leading up to 2020, owing to increased demand. Over the current quarter, market sales increased at a 2.2 percent annualized rate to $46.0 billion.
Despite a marginal downturn in nonresidential development, industry growth over the last five years can be attributable to solid growth in the residential construction sector, expanded access to credit, and increasing disposable income.
Low interest rates, a tight housing market, and increasing property prices have all motivated residents to invest in their homes. The economic downturn triggered by the COVID-19 pandemic is projected to result in a substantial 7.0 percent drop in market sales in 2020.
The Architect industry’s revenue growth is expected to increase over the next five years, as the industry rebounds from its 2020 downturn.
During the prediction period, market revenue is expected to grow at a 2.6 percent annualized rate to $52.2 billion.
Moving forward, the degree of development in the residential and non-residential construction sectors will most likely decide progress.
A recovery in corporate earnings and credit availability is anticipated, allowing companies and individuals to obtain the funding required to begin building projects and fund the expense of architectural services.
The Fed has said that it will keep interest rates down during the country’s economic recovery, which will favor construction activity, this sector, and many others.
Architects use their knowledge of architecture, planning procedures, zoning laws, building codes, and building materials to plan and design residential, institutional, recreational, commercial, and industrial buildings and structures.
The Architects industry is known for having a low capital intensity. According to data, organizations in the Architects business will spend $0.03 on capital investments for every $1.00 spent on labor in 2020.
Architects are a knowledge-based sector that combines specialized professional abilities and creativity to satisfy customers’ design and planning solutions.
Wage expenses as a percentage of industry sales have declined marginally over the last five years while growing usage of computer-aided design (CAD) and building information modeling (BIM) software has raised buy and capital expenditures.
On the other hand, labor is still vital to industrial operations, and technology developments have improved productivity without resulting in automation. As a result, the capital intensity will likely stay low.
Professionals in the business are highly trained and skilled, placing upward pressure on salaries and contributing to the industry’s low capital intensity.
The Architects industry has shown modest revenue fluctuation during the five years leading up to 2020. Building and construction activity affects demand for architectural services. A healthy economy, robust employment, and high corporate profit rates stimulate construction growth.
Economic growth increased employment, and increased disposable income are all factors that influence residential buildings. Interest rates are also important since they govern how much money can be borrowed to fund projects.
Over the past five years, as commercial and residential construction picked up, so did the demand for architects. Consequently, steady growth in office, retail, institutional and residential construction has led to consistent annual revenue growth over the majority of the period.
In 2015, revenue for the Architects industry grew by 7.5% and was followed by equally strong growth in 2016 of 6.0%, which contributed significantly to the overall level of revenue volatility. Similarly, strong growth of 4.0% in 2017 is estimated to have been followed by similar growth in 2018 of 4.5%, putting downward pressure on the level of revenue volatility.
The value of construction activity primarily underlies these fluctuations and exhibits similar growth patterns. However, a strong and sudden decline in industry revenue due to the COVID-19 pandemic, reversed this trend, resulting in a higher level of revenue volatility for the period overall.