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Throughout May and June 2024, we invited our community to offer us insights and feedback on how you were feeling about the economic outlook of your firm and sector. As we explained at the time, this project was motivated by several observations from economists within and beyond the AEC industry that the U.S. may be “sleepwalking” into a recession.

To investigate how the architecture profession was fairing against such headwinds, we asked you a series of questions on the economic health of your firm, your sentiments on the wider sector, your experience of the job market, your conversations with clients, your plans for the future, and more.

Having analyzed your feedback, Archinect can now reveal our findings, which will be published in two parts. Part One, below, offers an overview of how both architects and clients are feeling about the industry, in addition to how they are responding to the challenges they are facing. Part Two sets out some of the key factors and driving forces behind the current economic climate.

Key observations

• Architects are more downbeat about the economic health of the architecture industry at-large than they are about their own firm's business health or the health of the U.S. economy beyond architecture.
• Workers/employees are noticeably more pessimistic about the health of their firm, the architecture industry, and future prospects than firm owners are.
• Most architects feel that their firm's business health is in decline, and they are not prepared for a recession.
• A majority of architects say that clients are cautious about starting or continuing projects.

How architects are feeling

Most architects are either neutral or pessimistic about their firm’s business health

Three-quarters of all respondents felt either neutral or pessimistic about their own firm’s current business health, with the ‘neutral’ sentiment holding a slight lead over ‘pessimistic.’ In a trend that was replicated across many answers in this survey, workers are more downbeat about the current economic climate than firm owners. Workers were half as likely to say they were optimistic about their firm’s health and 13% more likely to say they were pessimistic.

Architects are more pessimistic about the wider industry than about their own firm

While 37% of respondents felt pessimistic about their own firm’s business health, almost 59% felt pessimistic about the wider architecture industry’s business health, a jump of over 20%. This discrepancy was observed across both firm owners and workers. As with our previous question, workers are significantly more downbeat about the industry’s health and owners, with a majority (66%) of workers expressing pessimism versus a plurality (47%) of owners.

Architects feel more upbeat about the wider economy than about the architecture industry

The pessimism architects expressed about their own industry doesn’t match their sentiments about the wider U.S. economy and is, in fact, more in line with how architects feel about their own individual firms. Almost three-quarters felt either neutral or pessimistic about the wider economy, with a slight lead going to ‘neutral.’ While workers are still more downbeat about the wider economy than firm owners are, the difference is not as extreme as those about the architecture industry.

Architects feel the health of their firm has declined over the past year

Only 9% of respondents felt that their firm’s business health had improved, while 60% said their firm’s health had declined. Once again, our survey showed a significant divergence between the sentiments of owners and workers. While 20% of owners said their firm’s health had improved, only 3% of workers shared the same sentiment. In addition, half of firm owners said their firm’s health had declined, versus over 65% of workers. It is worth noting, too, that while a majority of respondents said their firm’s business health had declined, the first chart in this article shows that this has not uniformly translated into pessimism about the firm’s health.

A lack of new projects is the most significant challenge facing architects

When asked an open question on what some of the biggest challenges facing their firm have been, a lack of new projects was the most common challenge cited. In addition to a lack of new projects, respondents reported a squeeze on fees from clients, slow payment of fees, a pause on existing projects, and increased competition between firms for securing new work. Finally, despite a slowdown in hiring activity across the industry, a small minority of firms also reported challenges in hiring experienced staff and challenges in stopping staff from moving away from architecture firms and into client-side roles. 

Part 2 of our analysis takes a closer look at what respondents believe is causing these challenges.

How clients are feeling

Clients are telling architects that they are cautious about starting or continuing projects

Over half of respondents reported that their clients have expressed caution about their intentions to start or continue projects, with only 18% expressing positivity and 20% expressing neutrality. Firm owners and workers are broadly aligned in their experience with clients.

Clients are concerned about interest rates, construction costs, and uncertainty

We asked survey respondents to elaborate on specific sentiments they were hearing or have observed from clients. The most common concern expressed by clients in explaining their caution about the future was high interest rates, which has deterred clients from seeking construction loans. Several other respondents cited client concerns over construction costs which one respondent said “are exceeding even the most pragmatic estimates.” 

Some clients also remain skeptical over the future demand for certain sectors, such as office space, given continued post-pandemic remote or hybrid working practices among companies. “They are in a holding pattern,” one respondent told us, in sentiments that accurately captured the sense of uncertainty expressed by many clients on behalf of architects.

Part 2 of our analysis takes a closer look at the driving forces behind the current economic climate among architects and clients.

How architects are preparing for the future

Owners and workers are divided over how prepared their firm is for a recession

Given the prediction by some economists that the U.S. will fall into a recession in 2024, we asked respondents how prepared their firm was for such an eventuality. Overall, 59% of respondents felt their firm was unprepared, with 37% saying their firm was prepared. However, a significant difference of opinion exists between owners and workers, with just over half of owners saying their firm is prepared versus only 31% of workers.

Owners largely plan on keeping their employee headcount stable, while employees are divided on how secure they feel in their role

When firm owners were asked how they believe their employee headcount will change across the rest of 2024 and into 2025, almost two-thirds told us their numbers would remain stable, with 24% predicting a fall and 12% predicting a rise. Meanwhile, employees are almost split in half on whether they feel secure or not secure in their current roles. Employees are, therefore, twice as likely to say they are not secure in their role as employers are to say that they will make cuts, continuing the survey’s wider trend of workers feeling more downbeat about the industry than firm owners.

To prepare for a recession, firms have built cash reserves, scaled back hiring, and prioritized projects with strong runways, such as government contracts

We invited respondents who told us they were prepared for a recession to share with us some of the strategies or tactics they had deployed to build resiliency. Strong cash reserves were the most cited strategy mentioned by respondents, in addition to more conservative overhead practices such as hiring freezes, layoffs, and delayed investments in office space and equipment.

Several firms also cited government contracts as a reason for their preparedness. One respondent told us, “I work for a large company, we have a lot of government work, and the government always pays,” while another said, “Our firm has expanded marketing to the government sector and is well positioned.” Finally, a handful of firms cited international work as a reason for their confidence.

About our survey

Archinect’s Business Conditions in Architecture Survey was open for responses from May 16th to June 17th, 2024. During that time, a little over 100 responses were received. The geographic spread was balanced across the U.S. regions, with the Northeast providing the largest number of responses (38%), followed by the West (29%), Midwest (9%), Southeast (8%), and Southwest (7%).

The profile of respondents was also balanced across the profession. 59% of respondents identified as employed workers, while 34% identified as firm owners and 7% as unemployed workers. The most common firm size to respond was small firms of 2–10 people with 34% followed by medium-sized firms of 11–50 people (30%), large firms of 50+ people (29%), and sole practitioners (8%).