Archive for December, 2017

“Charting” and “Graphing” the A/E/C Firm Forecast for 2018 and Beyond

Wednesday, December 6th, 2017

The 285 pages of the recently published report, The 2018 A/E/C Firm U.S. Market Forecast, include almost 90 tables and graphs to help illustrate the book’s analyses and projections. Published in November by PSMJ, the Forecast assesses seven major markets and more than 40 sectors and subsectors for their outlook heading into 2018. The thoroughness of the research is indicated by the more than 30 pages of references in the Appendix — over 200 sources total.

Though the book focuses on 2018, it seeks to provide insight into years 2-5 in the cycle as well. It also looks at the industry’s outlook and the various market sectors from the outside in, addressing how geopolitical, economic and societal indicators will affect the markets going forward.

As for the tables and graphs, I’d like to share a few of them to give some sense of how they contribute to the overall product (which is available for purchase at http://store.psmj.com/2018-a-e-c-firm-u-s-market-forecast).

Chart 1, Page 9. After the introduction, the book begins with 10 trends in the industry. These include several technology-based issues, including The Internet of Things, big data, autonomous vehicles and building information modeling (BIM). One of the trends in this year’s version of the book, which has been included as a trend all seven times I’ve written a book like this, is about hiring (“Hiring Challenges Rise Up”). A few years ago, the gist of the story was how the recession and post-recession economy offered opportunities for staff upgrades. Now, we’re back to the war for talent. The chart below shows how the number of U.S. architecture grads has flatlined over the years, even decreasing some. Engineers, meanwhile, experienced a notable dip beginning in the 1980s and carrying through to about 2010, at which point the line starts a slow, steady climb.

The data comes from the informative, recently released Projections of Education Statistics to 2025, from the National Center for Education Statistics. Graduation rates for architects, in particular, are forecast to remain muted, while engineers may continue to see small gains across all disciplines, according to the publication.

The chapter delves into other hiring challenges, including gender issues, immigration and demographics. As with all of the trend chapters, it includes strategies as well.

Here are two of the nine strategies in this section:

  • Reward your superstars inordinately. Don’t worry about upsetting your average employees by taking care of your above-average ones. If you don’t reward for performance, you’ll end up losing the high performers and keeping the mediocre (or worse) ones.
  • Make sure your office is a place people want to be. Take a fresh look at the environment that your people are working in. If you weren’t used to it, is this a place you would want to come to every day? Are you taking measures to build a corporate culture that fits the firm and meets your people’s needs? Is your firm hospitable to women and minorities?

Table 17, Page 105. Because many A/E/C firm sectors and subsectors are driven by local and regional factors, the book focuses on “where” things are happening as much or more than “why” and “when.” For the multifamily market, as well as some of the commercial (e.g., office, industrial) and transportation markets (e.g., airports, ports), we included a table or bullet list that addresses the status and outlook by city or state. Below is an example.

Sources for the multifamily and commercial markets include the exceptional research arms of real estate companies such as Marcus & Millichap, Colliers, CBRE and Cushman & Wakefield. Table 17 includes a similar analysis for over 40 metros.

 

Graph 41, Page 212. A major finding of the health care section of the book is that the trend toward smaller, more flexible space in the sector is likely to continue. Medical office buildings and urgent care centers appear to be on the upswing, while major hospital projects — still occurring at times — are not expected to be as common. The continued reduction of time that patients spend in a hospital bed is an indicator of why this is so.

Graph 25, Page 152. In the final chapter of the book, each of 41 sectors and subsectors are ranked “best to worst.” In reality, most of the markets appear to be in at least decent shape heading into 2018. The purpose of the rankings is to put some context into the relative strength or weakness of each market, so it includes a “grade” (A-F) and an arrow indicating if it is heating or cooling, and by how much.

This is, of course, an imprecise exercise, but based in the knowledge and insight gained through hundreds of hours of research and discussions with industry owners, experts and practitioners.

Among the highest-rated of the markets is “Industrial/Warehouse,” which is benefiting from the e-commerce boom and its various practices. This includes robotics technology, “last-mile” delivery and so on. In addition to moving ever closer to the end user, warehouses are also a prominent piece of the increasing buzz around ports and their distribution networks.

The graph below illustrates how strong the warehouse market has been, nationally speaking.