by Kermit Baker, PhD, Hon. AIA
AIA Chief Economist

Business conditions are very favorable for architecture firms, with leaders in every AIA region rating them as at least reasonably strong, and most rating them very strong. For every region except two, business conditions are viewed as having improved since last year, and in most cases the improvements have been quite substantial.

Experienced architects (with 8–10 years of experience) as well as moderately experienced architects (3–6 years) are in fairly strong demand nationally, while there is moderate demand for managers and senior managers, as well as interns. The residential sector is rated the strongest construction sector nationally for architects, with the institutional sector reported as strong in most regions, and the commercial/industrial sector reported as showing moderate strength.

These are the key findings from the 2005 AIA Component Survey of Business Conditions. Component leaders from each of the 18 AIA regions reported on business conditions and need for architecture staff in their areas. Their evaluations of market conditions present a picture of how the profession is faring from region to region. Given a healthy national economy, a strong residential construction sector, and an improving nonresidential construction sector in most regions of the country, it’s not surprising that AIA component leaders are upbeat about business conditions.

Business conditions strongest in the Northeast
On a 10-point scale with 1 indicating “terrible,” 5 indicating “so-so,” and 10 indicating “couldn’t be better,” component leaders were asked to rate business conditions in their area. With an average score of 7.3, leaders are generally reporting very healthy conditions. The lowest average score for any AIA region was 5.2, so no regions were rated as having weak business conditions.

Despite relative strength everywhere, there are some regional differences in the reported health of architecture business conditions. Respondents from all of the AIA regions in the Northeast reported conditions as at or above the national average. Conversely, all AIA components in the Midwest reported conditions as below the national average. AIA regions in the South and West had a mix of AIA regions with above-average, average, and below-average scores.

Component leaders were also asked to rate business conditions compared to a year ago on a 1-10 scale, with 1 indicating “much worse,” 5 indicating “about the same,” and 10 indicating “much better.” The average score was 6.3, indicating that conditions on average are viewed as being better than a year ago.

In all areas of the country, there is a mix of AIA regions reporting that conditions have significantly improved over the past year and that conditions have improved only modestly. Leaders in only one AIA region—New Jersey—rated business conditions as worse than a year ago, but since conditions are rated as very strong at present in this region, there should be no cause for concern. Leaders in one additional AIA region—Middle Atlantic—rated conditions as about the same as a year ago, and again business conditions were reported as healthy at present.

Greatest demand reported for mid-experienced architecture positions
Strengthening business conditions at architecture firms has created need for staff positions, but not evenly across the experience scale. Component leaders report the greatest need for experienced architects (8–10 years of experience), followed by moderately experienced architects (3–6 years), interns, and managers and senior managers. Each of these categories was rated on a 3-point scale, with 1 indicating “no need,” 2 indicating “some need,” and 3 indicating “great need.” For all position categories, leaders indicated at least some need on average.

AIA regions reporting the greatest need for architecture positions are widely dispersed. For the manager and senior-manager, experienced-architect, and moderately experienced-architect categories, the AIA regions with the greatest needs are equally distributed among the Northeast, South, and West. Also, for each of these experience levels, the AIA regions with the least need are in the Midwest.

The pattern is somewhat different for intern positions. AIA regions with the greatest need are again dispersed across several areas of the country. However, several of the AIA regions with less need for these positions are in the Northeast.

Residential still rated as strongest construction sector, but nonresidential sectors improving
Component leaders rated each of the major construction sectors as reasonably healthy. On a 5-point scale, with 1 indicating “very weak,” 3 indicating “moderate,” and 5 indicating “very strong,” the residential market was rated the healthiest, followed by institutional buildings, and commercial/industrial facilities. These ratings show improvement for the commercial/industrial sector from the 2004 AIA Component Survey, while the residential and institutional ratings are largely unchanged.

AIA Component leaders in the Northeast and West generally reported strong conditions for residential activity, while AIA regions in the Midwest and South generally reported somewhat weaker conditions. However, all AIA regions reported conditions in the residential sector to be at least moderate, and many reported them to be strong.

AIA regions in the South reported the highest ratings for the commercial/industrial sector, while AIA regions in the Midwest generally had the weakest ratings for this sector. The strongest ratings for institutional buildings were dispersed nationally, although the weakest ratings were more concentrated in AIA regions in the Midwest.

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