Architect (Urban Designing)

Industry Snapshot

Design firms primarily engaged in providing professional construction-related

design services constitute the architectural services industry. This industry
includes companies that offer engineering design services related to architectural
work, but does not include civil engineering or ship and boat design companies.
Landscape architecture, graphic arts, and drafting disciplines are covered in
separate classifications.

Aside from actually designing structures, architects typically are employed

throughout all phases of the building process from conceptual planning through
client construction. In 2009, an estimated 41,800 establishments employing
approximately 270,500 people existed in this industry. About 96,480 architects
(except landscape and naval) were working in the United States in 2008.
Licensure is the highest form of industry regulation, and all 50 states require
architects to be licensed.

After suffering from a deep recession in the late 1980s and the early 1990s, the
architectural services industry began a steady rise into the 1990s. Consumer
confidence mounted throughout the late 1990s, and the economy boomed. When
weakening economic conditions slowed consumer spending in the early 2000s,
falling interest rates bolstered the home construction sector, although the office
construction sector began to slow at that time. Housing construction boomed
during the mid-2000s, but in 2008, the bottom fell out of the real estate market
as the economy sank into a recession. As a result, the number of new
residential, commercial, and industrial building projects slowed significantly.

Organization and Structure

In 2009, of the architect membership of American Institute of Architects (AIA),

which represented over 50 percent of all licensed architects in the United States,
54 percent were over 50 years old, 45 percent were between the ages of 31 and
50 years old, and just 1 percent was under the age of 30. Eighty-one percent of
these architects work for an architectural firm (including sole proprietorships); 5
percent, for other design firms; 2 percent, for government; 2 percent, for
universities, schools, or associations; 2 percent, for corporations; 1 percent, for
construction firms; and 1 percent, for engineering firms (6 percent is unknown).
Architecture firms design a multitude of different structures for all sectors of the
market. Office and apartment buildings, schools, military installations, churches,
factories, hospitals, houses, and airport terminals are but a few of the facilities
that they design for commercial, government, and private nonprofit
organizations. While some firms specialize in serving one niche or a few related
segments of the market, others are highly diversified and offer a variety of
design services to all types of clients.

The Design Process.

Building design can be a complex, detailed, and painstaking endeavor. In

addition to the important consideration of appearance, architects must also
stress functionality, safety, and economy in the design process. Even one
minuscule flaw in a volume of construction drawings can result in costly
litigation and the erosion, or destruction, of a firm's reputation. More important
than pleasing the potential users of any structure or satisfying personal design
aspirations, architects must accommodate the client who commissions and funds
a project.

Design programming is the first stage of the building process. Architects are often
called upon at this point to determine what type of structure to erect. Marketing
research, demographic analyses, regulatory constraints, and other factors all
help to determine economically viable development options. Site selection and
acquisition follow the design programming stage. The architect analyzes factors
such as soils, drainage, utility availability, tax rates, and traffic patterns to
determine where to build a project. If the client already has a parcel of land, the
firm can help determine the financial and physical feasibility of developing the
site.

After the client decides to build, the architect begins the conceptual design
process. Schematic drawings and relational diagrams, prepared by the architect,
allow the client to study possible options for developing the site. Crude models
are often used to represent ideas in three dimensions. The conceptual design
process eventually results in a hypothetical plan that is used to generate cost
estimates and guide the development of more detailed elevations, cross-sections,
models, and perspectives.

After developing a detailed design, the architect begins the bulk of the design
work, which are detailed construction drawings. These highly detailed drawings
determine accurate construction cost estimates and bids by contractors. They
also dictate the quality of craftsmanship and materials to be used by
contractors. Architects cooperate with engineers and other professionals to
ensure that the design is technically appropriate and complies with legal
guidelines. When the working drawings are complete, the architect usually takes
bids on the project from contractors, awards a contract, and supervises
construction to ensure that the contractor properly executes design details.

Although rates vary, most architects bill clients on a per-hour basis. The total bill
for architecture and engineering design services is often in the range of 2 to 4
percent of the total construction cost of a project, but can be much more or less
depending on the type of project or the level of involvement by the architect.

Types of Firms and Projects.

The three types of companies primarily engaged in providing architectural

services are engineer/architecture (E/A) firms, architecture/engineer (A/E)
companies, and architecture firms. Typically, an estimated 15 percent of the total
billings by architectural firms are rendered by firms in the architectural services
industry. Engineering and construction firms and other companies that offer
services related to architectural work, such as surveying services, consume the
bulk of the revenues.

Purely architectural firms bill strictly for architectural design work. They do not
have engineers on staff and often offer limited construction management
expertise. This segment supplied only a small percentage of all architectural
services rendered by U.S. companies. A/E firms, while still emphasizing
architectural skills, have engineers on staff with expertise related to architectural
building design. Firms in this category typically account for a small percentage of
industry billings.

E/A firms maintain architects on staff but emphasize engineering design

services that are related to construction work. These firms produce roughly one-
half of all industry billings and furnish the highest percentage of all architectural
services rendered by U.S. firms.

Background and Development

Architects have been designing structures in return for compensation for more
than 3,000 years. Although several famous architects designed well-known
projects during the early history of the United States, such as Thomas
Jefferson's Monticello in the early nineteenth century, an organized architectural
profession did not exist in the United States until the 1850s. In fact, formal
educational programs for architects were unavailable until the 1860s, with the
establishment of the Massachusetts Institute of Technology, Cornell University,
and the University of Illinois.

Prominent works which sprang from the fledgling architectural services industry
in the middle and late nineteenth century included the Marshall Field &
Company building in Chicago, the Wainright Building in St. Louis, St. Patrick's
Cathedral in New York, and the Harvard Museum of Comparative Zoology in
Cambridge. Prominent architects of the period who owned firms included James
Renwick, Louis Agassiz, H. H. Richardson, and Louis H. Sullivan. Between 1900
and 1940, Frank Lloyd Wright, Germany's Mies van der Rohe, and France's Le
Corbusier, among others, designed significant projects and had enormous
influence on the profession. Famous works of this time included many office
buildings, such as the Empire State Building and Rockefeller Center in New
York.

It was not until after World War II that the U.S. architectural industry began to
experience rapid growth and to become closely affiliated with building and
construction industries. During that time, large corporations developed massive
structures that projected wealth and distinction, and government expenditures
for infrastructure and public works grew at an unprecedented rate. This
development boom gave birth to many large architecture firms, such as Hellmuth,
Obata & Kassabaum and Perkins & Will, that employed hundreds of architects.
Skidmore, Owings & Merrill, one of the larger firms in the post-war period,
designed projects such as the Connecticut General Life and Inland Steel
Buildings. The General Motors Technical Center and Frank Lloyd Wright's
Guggenheim Museum were other prominent landmarks that characterized the
progression of the industry from the 1950s through the 1970s.

By 1983, however, new development activity was leading the architectural

services industry into an era of unprecedented profit and growth. Deregulation of
lending institutions, an influx of foreign investment dollars, and new tax laws all
combined to generate a massive injection of capital into the commercial
development industry. Between 1982 and 1985, the total amount of commercial
space designed by architects ballooned from less than 700 million square feet
per year to over 1.3 billion. At the same time, residential markets were also
booming and the demand for new public construction increased. As a result, the
total number of establishments in the architectural services industry jumped over
20 percent, from 14,089 in 1985 to a peak of 17,777 by 1987. During the same
period, revenues leapt from $5.9 billion to over $9.8 billion, and industry
employment shot up to nearly 140,000 from only 105,000.

In the late 1980s, the flow of capital for new design projects waned. The Tax
Reform Act of 1986, which discouraged new construction, and a shortage of
savings and loan capital were two of the various factors contributing to a
slowdown in 1987. Architecture firms saw a significant decline in the number of
design jobs available in many commercial and residential markets. In fact, by
1989, it was clear that the industry had fallen into a severe, and potentially
prolonged, recession. Total new commercial development plunged to about one
billion square feet in 1988, and fell to under 800 million square feet in 1989.

By the end of 1989, the market for architectural services appeared to many
analysts to have bottomed out. Nevertheless, while most firms were on the ropes
and struggling to survive the industry shakeout, the development market
continued to plummet in 1990 and 1991. In fact, many office buildings that
architects had designed in the late 1980s opened in the early 1990s without a
single tenant; these became known as "see-through buildings." The total demand
for new construction continued to fall from $410 billion in 1989 to about $358
billion in 1991. The market for residential design services was also hit hard, as
new construction in that sector fell 14 percent in the same three-year period.
Although many firms were able to stay afloat by emphasizing public works
projects, which experienced expenditure increases of 9 percent between 1989
and 1991, most firms lost revenue.

In response to harsh market conditions, the architectural services industry

became increasingly competitive in the early 1990s. As hundreds of firms closed
their doors, most remaining companies quickly took measures to increase their
market share and to maintain profits. In some cities, about 50 percent of all
architects were laid off. Those hit hardest were young, inexperienced workers
and older, highly paid employees. Firms were also reducing fees in an effort to
undercut competitors. Most importantly, however, architecture firms were looking
to new growth markets and technology to give them an edge in the 1990s.

Market conditions improved slightly from 1991 to 1992, indicating that the
development drought was easing. The total value of new construction increased
about 4 percent to about $423 billion. Although work in commercial markets,
especially office building design, continued to decline, housing and public works
design projects increased. Furthermore, spending in some commercial niche
markets, such as health care, improved as much as 5 percent. Importantly,
remodeling, retrofit, and repair construction for all sectors reached record levels
in 1992, allowing many firms to boost billings on small maintenance jobs.

A survey of 100 design firms by Architectural Record in 1992 revealed that

nearly half the respondents had realized a reduction in the construction dollar
value of their commissions since 1990. The average decrease was between 10
and 25 percent, although some firms lost as much as 90 percent. Of the survey
respondents, 34 percent reported that their workload was down, 24 percent said
it was up, and 42 percent felt that it had stabilized. A similar survey
byEngineering News-Record showed a 20 percent decrease in design work
backlogs from early 1991 levels, indicating that work was becoming more
difficult to secure.

Firms were taking a variety of steps to improve internal operations and increase
competitiveness. Most firms were increasing their workload-to-staff ratio to save
money and decreasing fees to attract more business. This was often
accomplished by relying on part-time help from trained architects that were
called on only when absolutely necessary. Popular trends were "hoteling," where
employees would check into offices for short stints on special projects, or where
several employees would use the same office but at different times of the day.

One of the most important internal changes for many companies was the
increased use of technology to lower labor costs. In fact, 12 percent of
respondents in the Architectural Record survey indicated that despite an
increase in billings they had elected to diminish the size of their staff. Computer
automated design (CAD) systems were a major factor in this increased
productivity for some firms. "I've eliminated my whole office staff with a
computer," said Philadelphia architect David Steele in the Architectural Recordin
March 1993. Many companies were also eliminating clerical help with the aid of
new office technology as computers, answering machines, and cellular phones
replaced receptionists in some offices.

In addition to increasing the productivity of their internal operations, many firms

in 1993 were expanding their service offerings. Some companies were going into
project management, using their design expertise to streamline the construction
process and save money for contractors and owners. Other architecture firms
were expanding into interior design, facilities management, and environmental
planning and engineering to increase revenues. Conversely, some firms were
reducing their offerings, choosing instead to specialize in tiny niche markets
where they held a competitive edge. Niche growth areas in the commercial
market for architectural services included designs for privatized prisons, arenas,
hospitals and other health care facilities, long-term care facilities, warehouses,
and recreational structures around river boat gambling casinos.

Entering new markets was another way that architecture firms were trying to
maintain profitability. As design work for commercial construction continued to
decline through 1993, public works projects were allowing many firms to
increase revenues. For instance, while the amount of new hotel space
plummeted 40 percent in just one year between 1991 and 1992, the value of
new public works projects steadily increased from almost $91 billion in 1989 to
over $102 billion by 1992. Water supply facilities and miscellaneous public
buildings, which grew in 1991 and 1992 at a rate of 5 percent and 7 percent,
respectively, offered the greatest potential for architecture firms competing for
public works commissions. Design projects related to utility construction and
conservation also offered increased opportunities.

After the recession of the early 1990s, the industry began to grow again,
bringing in over $14.6 billion in 1994. Revenue was up 8.7 percent from 1993,
and up by almost 20 percent from 1991, and industry strategists predicted the
growth would continue well into the twenty-first century. According to the AIA,
building activity increased an average of 1 percent each year from the levels of
the first half of the 1990s.

Commercial development of suburban office space contributed to the life of the

industry in the early 1990s, as commuters fled the cities and downtown office
vacancy rates soared. Even when urban office vacancy rates stabilized by 1996,
suburban office occupancy increased, and vacancy rates in the suburbs dropped
by 9 percent annually as growing numbers of businesses abandoned their
outmoded urban operations in favor of modern new quarters in the suburbs.

At the turn of the twenty-first century, conditions worsened for the commercial
building industry as the economy weakened and businesses began to rein in
spending. At the same time, businesses found it much more difficult to secure
funding for expansion efforts. Large projects, including office towers, suffered
most severely as a result of the return to conservative lending policies, which
brought an end to what some observers called speculative lending.

Despite the slump in commercial construction in the early 2000s, the residential
housing market, which accounted for approximately 15 percent of total billings,
held strong. Interest rates neared historic lows in 2001 and 2002, fueling new
home construction. New housing starts, the number of new single and multi-
family homes under construction, rose from 1.58 million in 2000 to 1.6 million in
2001.

In order to encourage a continued source of work contracts, engineering and

construction companies devised "one-stop shop" (design-and-build) services.
Often, these firms offered architectural services at very low or negligible costs to
help the company secure large construction and project management contracts.
Gaining prominence at the turn of the twenty-first century, the design-build
industry saw sales for the top 100 design-build companies grow 22.3 percent to
$39.89 billion in 2000. Consequently, U.S. nonresidential construction market
share for the top 100 design-build firms grew to 35 percent in 2000, compared to
25 percent in the mid-1990s. As stated in Engineering News Record, "The trend
is clearly away from project-by-project management and toward management of
larger construction programs for clients." The Design-Build Institute of America
predicted that design-build companies would increase their share of the U.S.
nonresidential construction market to 45 percent by 2005.

Social and Political Factors. 

Until the late 1990s, one of the most stable areas of growth for the industry was
retail construction sales, which increased a steady rate of 2.5 percent every year
from 1980 to 1996. However, several factors were pushing that figure down.
Home shopping through network clubs and the Internet was taking away the
need for retail centers. In addition, as the baby-boomers aged, services became
more of a concern than goods, lessening the need for retail centers even more.
The effects of the Americans with Disabilities Act of 1990 offset some of the
projected decline. Compliance with the act required that many newer buildings
be made handicap-accessible, and this was expected to provide millions of
dollars in architectural design contracts, along with rehabilitation and
maintenance design work, especially for aging infrastructure.

Computerized Design.

Two important advances in the architectural services field in the early 1990s
were computer-aided design (CAD) software programs and 3-D modeling. As late
as 1993, architects in many offices were still designing with ink or pencil on
vellum or Mylar surfaces. Designers sat at a drafting board and used triangles
and compasses to produce precise technical drawings. With the introduction of
CAD, however, an increasing number of professionals moved away from the
drawing board and onto the computer to develop their designs. Although both
methods were extremely labor intensive, CAD offered the advantages of allowing
architects to save their work, to duplicate and move parts of a design, and to
make changes more easily. Additionally, many tasks that were cumbersome on
the drawing board were accomplished easily using CAD. Calculations of surface
areas and volumes for earthwork projects were among the functions made easy
by CAD software.

Critics of CAD argued that it was too costly for smaller firms to implement, that it
stifled the design process and limited flexibility, and that it displaced architects.
In contrast, others maintained that the implementation of CAD systems
increased productivity for designers and reduced staffing requirements. For
instance, J. F. Borelli, a New York architect, increased billings at his firm by 125
percent between 1990 and 1992 when he expanded his CAD implementation. He
maintained his staffing level at 65 employees and discovered that clients
increasingly requested that projects be developed with the CAD software.

Even more sophisticated than CAD software were 3-D modeling systems that
allowed architects to design projects in three dimensions on computer. Three-
dimensional modeling enabled architects to create virtual walk-through
presentations of their projects, which allowed clients and builders to gain a
better sense of the reality of a structure. Through the implementation of 3-D,
clients and builders could conveniently view the successive stages of a project,
or they could view structures from different angles. By 1993, several larger firms
used 3-D modeling regularly. The technology remained expensive, but the
subsequent savings in construction time and improved communications between
designer and client often justified the implementation of 3-D software and
accelerated the recovery of equipment costs.

Turn-of-the Century Design Trends.

As architects of the late twentieth century turned increasingly to new digital

technologies for purposes of productivity, they experimented with 3-D technology
to develop "e-topia" structures in modern communities, according to William J.
Mitchell in the Architectural Record. In pursuit of e-topia, an expansion of the
kiosk concept, designers undertook the design of virtual malls for online
commerce, as well as virtual amusement parks and other conceptual structures
that were previously limited to the physical realm. Through virtual reality
technology, architects became further empowered in the arena of restorative
construction. Modern designers ushered the art of structure restoration to a new
level of evolution at the threshold of the twenty-first century by tapping the
potential of 3-D systems and virtual reality to redefine the parameters of
architectural restoration. Through the process of virtual reconstruction, historical
structures became available for simulated viewing in their original state. Even
ancient structures that ceased to exist altogether at some time in the past might
be recreated in simulation form, through intensive application of the technique.

Increasingly, as the twentieth century drew to a close, what was old became
new again, including the architectural theories of feng shui, which experienced a
revival in the United States during the 1990s. Progressive architecture firms,
encouraged in part by academics at the University of Buffalo, subscribed to the
ethereal concepts of the ancient Chinese art, the substance of which involves
strategic placement of space and energy. Proper implementation of feng shui
begins prior to construction of a building, with the selection of a site. During the
design phase, the orientation of the structure must allow for consideration of the
forces of wind and water, as implied by feng shui. Despite the ancient mystic
and religious connotations of feng shui, adherence to the practice resulted in
building designs not unlike those of mid-twentieth century architects.

In stark contrast to feng shui, designer Gideon S. Golany discussed the use of
geo-space (building underground) to squeeze more space for structures from
cluttered landscapes in highly populated areas. Building groundward presented
a number of advantages for better protection from the elements and lower energy
consumption, according to Golany. The practice is most advantageous as a
means of conservation, and despite the speculative nature of underground
construction for human occupation, geo-space designers implemented designs in
Montreal, Paris, and Japan by the end of the 1990s. Geo-space designs were
particularly well-disposed to the growing trend among architectural designers to
become involved in community development from the initial inception in order to
create a customized and cohesive functionality of design, in coordination with
existing regional demographics.

In 2003, the AIA reported that most of an architect's revenue was associated
with new construction, at a ratio of 66 percent new construction to 34 percent
renovation and rehabilitation projects. At that time, sole practitioners accounted
for just under one-third of architectural firms. Approximately 66 percent of firms
had between 2 and 29 employees, 2 percent of firms had between 50 and 99
employees, and 2 percent of firms had more than 100 employees. The largest
firms collected almost half of all billings, while sole practitioners received only 2
percent of industry billings. By 2005, overall billings by architectural services
establishments had increased 11 percent over 2002 levels, to reach $28.7
billion, a combined construction value of $360 billion.

In the early-2000s, the design of educational facilities brought in the greatest

amount of revenue, at 24 percent. Office building accounted for 14 percent,
health care facilities were 12 percent, retail and commercial space were 10
percent, multi-family residences were 7 percent, and single-family homes were 5
percent. By the late-2000s, health care had the highest percentage with 14
percent, followed by educational facilities with 19 percent, offices with 12
percent, and multi-family residences with 11 percent. Forecasts in 2007
expected the strongest growth to come from continued activity in the health care,
hotel, and office facility industry segments.

The industry also reported changes in the makeup of architectural firms, with
more women and minorities holding staff positions. In 2005, women accounted
for 26 percent of staffing, compared to 20 percent in 1999. Racial and ethnic
minorities held 16 percent of jobs, an improvement from 9 percent in 1999.

Current Conditions

According to data collected by the AIA, over the three year period of 2006-2008,
U.S. architecture firms increased their gross billings by nearly $16 billion dollars
(54 percent) to reach $44.3 billion in 2008--an average annual increase of 16
percent. The top five industry sectors in 2008 were health care, office space, K-
12 education, college/university education, and food services retail. Rounding
out the top ten were government and civic projects, hospitality industry,
industrial, transportation, and recreational.

AIA's study revealed to two particular trends. First, architecture firms showed a
significant increase in the number of "green" projects. In 2005, 31 percent of
firms reported using green design practices; by 2008, 50 percent of firms were
implementing sustainable design features. The largest increase was observed in
firms with 10 to 49 employees, which jumped from 48 percent to 72 percent
between 2005 and 2008. Second, over the same period, the percentage of firms
using Building Information Modeling (BIM) software increased from 34 percent to
69 percent. BIM uses three-dimensional, dynamic building modeling software to
create detailed building designs that can demonstrate the entire life cycle of that
building.

Despite this strong revenue growth, architecture firms began to feel the effects of
the economic recession late in 2008. Credit dried up, the residential housing
market collapsed, and residential, commercial, and retail building ground to a
near halt. In November 2008, the Architecture Billings Index (ABI), which is
considered a reliable indicator of future construction activity, was at its lowest
level (34.7) since it was first recorded in 1995. During 2009, conditions did not
improve, and staff layoffs were widespread as firms moved to cut costs. In
addition, small and mid-sized firms found themselves competing with much
larger firms for jobs that these heavy hitters would normally pass by. Robert
Cassidy wrote in Building Design & Construction in September 2009, "It's a
sign of how desperate things are that national firms that normally work on
hundred-million-dollar projects are themselves 'reduced' to fighting for the
'scraps' that in the past would have gone to small, local firms."

By late in 2009, the industry was looking at some signs of gradual recovery. In
October 2009, the ABI index had rebounded to 46.1, the highest reading since
the first signs of trouble in mid-2008. Inquiries for new builds in the institutional
sector (e.g., schools, hospitals) showed the most growth. The commercial and
industrial sectors remained flat in October, and the residential sector showed a
continued, gradual upward trend.

Industry Leaders

According to the Architectural Record, the top three firms in 2008 based on

revenues generated by architecture revenues were AECOM Technology Corp.; M.
Arthur Gensler, Jr., and Associates; and HOK Associates, Inc. Los Angeles-
based AECOM Technology is a global leader in design and engineering. Publicly
traded, AECOM reported revenues of nearly $5.2 billion (17 percent from
architecture services) in 2008 and employed 43,000. Among the few remaining
pure design firms in the United States, M. Arthur Gensler, Jr., and Associates
had revenues of $775 million (84 percent from architecture services) and
employed 2,275. The San Francisco-based company, founded in 1966 by its
namesake, remains privately owned. Also privately owned, HOK Associates,
Inc., located in St. Louis, takes its name from its founders, St. Louis architects
George Hellmuth, Gyo Obata, and George Kassabum, who created the company
in 1955. The firm reported earnings of $752 million (78 percent from architecture
services) in 2008.

Workforce

Most architects complete a five-year accredited college program. They must then
work for at least three years before becoming eligible for certification after a
series of exams. The industry employed 270,500 in 2008. Most work in
architectural, engineering, and related services in firms with fewer than five
employees. One in five were self-employed, a proportion that is three times
greater than other professions. According to the Bureau of Labor Statistics, in
2008 mean annual salary for architects was $66,140.

Explored by
Kartik Trivedi