Archive for the ‘AEC’ Category

May Proposal Activity Rebounds from Record Low

Tuesday, June 16th, 2020

NEWTON, Massachusetts – Overall proposal activity for the month of May rebounded from April’s historic lows in the PSMJ Resources Quarterly Market Forecast (QMF) survey of architecture, engineering and construction (A/E/C) firm leaders. The supplemental survey for just the month of May reported a Net Plus/Minus Index (NPMI) of -9%, an improvement from the -41% in April that was the lowest ever recorded in the 17-year history of the survey.

The NPMI represents the difference between the percentage of firms that saw growth in overall proposal activity and those that saw a decrease. This is the second consecutive month that PSMJ conducted a supplemental survey to assess the impact of the COVID-19 crisis. The consulting and publishing company has conducted the survey on a quarterly basis since 2003.

Despite the improvement from April, the May results remained in negative territory, where the overall proposal activity index had not been in nearly a decade. Eight of the twelve major markets assessed also showed improvement over the prior month, but were still far off typical levels recorded since the end of the Great Recession.

PSMJ’s Quarterly Market Forecast –
Proposal Activity Year-End 2007-May 2020

The Housing market improved markedly, up to -7% in May from -27% in April and -19% in the 1st Quarter of 2020. While still slightly negative, Housing’s increased activity may be a good sign for overall economic health as residential proposal activity tends to be a leading indicator for many other markets. David Burstein, PSMJ Senior Principal, says, “I expect to see a rapid rebound in housing and commercial development once the health crisis passes and the impact of record-low interest rates starts to be felt. Pent up demand should make its presence felt by the end of Q3, and even more so in Q4 if we see movement on an infrastructure bill.”

Water/Wastewater has been the most resilient of the major markets analyzed, holding the honor of being the only market to never fall into negative territory. Its +20% NPMI in May was far ahead of all other markets, following up on April results in which it was the only market in the positive (+5%).

By contrast, the Commercial Markets (Users and Developers) and Education offer the lowest level of proposal opportunity. Commercial Users (-35% in May up from -72% in April) and Commercial Developers (-43% from -60%) did show improvement, while Education continued to slide (-39% in May from -34% in April). These three markets lagged the field even before the COVID-inspired economic crash. Education (+23% in the 4th Quarter of 2019) and Commercial Users and Developers (+26% and +24% respectively in 4Q19) were the three of the four worst performers in 2019’s final quarter.

Health Care (+5% in May up from -8% in April), Light Industry (+3% from -24%) and Environmental (0% from -30%) bounced back nicely in May. The Transportation market dipped to -9% from -6%, but never reached the depths of other markets. Rounding out the dozen are Heavy Industry (-8% from -23%), Energy/Utilities (-4% from -3%), and Other Government Buildings (-13% from -15%).

PSMJ’s Quarterly Market Forecast –
Proposal Activity by Major Market 4Q19-May 2020

The May supplemental survey including 173 responses, but did not include questions about the 58 submarkets measured in the quarterly surveys. PSMJ’s QMF has proven to be a solid predictor of construction market health for the A/E/C industry since its inception in 2003, with a consistent group of several hundred architecture, engineering and construction leaders responding.

APRIL CONSTRUCTION PROPOSAL OPPORTUNITIES PLUMMET TO HISTORIC LOW

Wednesday, May 27th, 2020

NEWTON, Massachusetts – Overall proposal activity for the month of April sank to a level unseen in the 17-year history of the PSMJ Resources Quarterly Market Forecast (QMF) survey of architecture, engineering and construction (A/E/C) firm leaders. The supplemental survey for just the month of April reported a Net Plus/Minus Index (NPMI) of -41%, which represents the difference between the percentage of firms that saw growth in overall proposal activity and those that saw a decrease.

PSMJ conducted the supplemental survey to assess the impact of the COVID-19 crisis; it was the first time the company has done a monthly survey of participants who usually provide answers based on quarterly results. Dating back to the inception of the QMF in 2003, the quarterly NPMI for all proposal activity was never lower than -33%, which occurred in the fourth quarter of 2008.

Public-sector markets generally held up better than private-sector and mixed markets. Among the 12 markets measured in the QMF, only water/wastewater was in positive territory with an NPMI of 5%. Energy/Utilities checked in at -3%, followed by Transportation (-6%), Healthcare (-8%) and Other Government Buildings (-15%). All five top-rated markets have representation from public-sector clients.

“Healthcare had been consistently at or near the top of our survey rankings, including in the prior two quarters,” said PSMJ consultant and survey manager Greg Hart. “However, with the current focus on COVID-19 occupying so much of the market’s resources, discretionary capital improvements are being delayed and even canceled.”

PSMJ’s Quarterly Market Forecast – Proposal Activity by Major Market
Proposal opportunities for the commercial markets continued to dwindle. The NPMI for Commercial Users sank sharply to -72% in April from -47% in the 1st Quarter survey, while the Commercial Developer market dropped slightly from -51% to -60%.

Environmental markets (-30%) reported a 25% drop in proposal activity as tangential commercial and residential markets slowed and the federal government indefinitely suspended enforcement of many environmental laws.

Housing (-27% down from +19%) and Education (-34% from -12%) continued to show substantial weakness from the COVID-19 crisis, as did Light Industry (-24% from -5%) and Heavy Industry (-23% from -17%).

The April supplemental survey did not include questions about the 58 submarkets measured in the quarterly surveys. PSMJ’s QMF has proven to be a solid predictor of construction market health for the A/E/C industry since its inception in 2003. The April supplemental survey drew 193 responses from the consistent group of hundreds of A/E/C firm leaders who regularly complete the quarterly survey.

For more information or to receive a copy of the full Quarterly Market Forecast April 2020 Supplementary Survey report, contact Jerry Guerra at 781-718-2403 or at jguerra@jagg-group.com.

About PSMJ: For more than 40 years, PSMJ Resources, Inc. has been recognized as the leading publishing, executive education, and advisory group devoted completely to improving the business performance of A/E/C organizations worldwide. http://www.psmj.com

PSMJ Resources’ Quarterly Market Forecast (QMF) Featured in MCD Magazine

Wednesday, May 20th, 2020

The healthcare market was one of only four to show positive growth in the 1st Quarter of 2020 per PSMJ Resources’ Quarterly Market Forecast, as reported in the linked article in Medical Construction & Design magazine.

Launch Your Thought Leadership Program Now

Monday, April 27th, 2020

With the world caught up in the COVID-19 crisis, investing in your thought leadership/content marketing program may not be top of mind for most principals of A/E/C firms. In reality, this is a great time to be thinking about it and working on it. Here are three reasons why:

  1. Publications need non-COVID stories now and later in the year. The sudden rise of COVID-19 forced editors and writers to refocus most of their working hours to address the ways that the global pandemic is affecting their audience. While they have some content in the pipeline to publish now and when the coronavirus talk dies down, the overall backlog of stories is likely to dwindle as these publications devote higher-than-normal amounts of time and effort to covering the pandemic. Why not pitch a story or two for current or future issues? Home-bound writers and editors also seem to have more time to consider and discuss submittal ideas while working remotely.
  2. Your people can create thought leadership content while working remotely. In a survey the last week of March, PSMJ Resources found that the median percentage of people working from home rocketed from 3% prior to the COVID-19 crisis to 95%. Firms have had varying results with this situation, but many are struggling to find ways to stay efficient and to keep their people busy. The time has never been better to encourage your people to contribute to the thought leadership program. You can do this a number of ways, but one good option would be to have a marketing manager or coordinator lead the effort. Speak with employees who have the overhead time necessary, draw out story ideas, help with the development, and determine the best outlet for the finished product. You can focus on owned media, such as a blog, or earned media that would require convincing a publication to showcase your work. It could even be part of a purchased media campaign, as in an advertorial in a top-tier trade publication in your markets. Strategic leaders understand and appreciate the benefits when a high percentage of their technical and executive staff participate enthusiastically in the thought leadership program. Focusing on this now could result in a carry-over effect when things return to normal.
  3. You may have something unique to contribute to the COVID-19 discussion. Does your firm have some expertise or experience that could inform the discussion about the post-COVID design and construction industry? Maybe it’s a viewpoint on how infection fears could influence the design of future K-12 school buildings. Perhaps you did something extraordinary to ensure delivery on a project. Or you can share how your firm handled the crisis, or what you’ve done to ensure that you can work more efficiently if a future outbreak occurs. Competition is tough for topical stories like these, and speed is critical to get into the conversation while it still matters. But publications are still looking for new angles that can better inform their audience. If you don’t contribute before COVID-19 fatigue sets in, someone else will.

    A/E/C firms with a large percentage of staff working from home may find the utilization rate going up, but productivity and efficiency flat or declining. Offering employees an opportunity to contribute to the firm’s thought leadership program can help reset this balance while allowing your people to reconnect with the firm’s mission and culture.

CONSTRUCTION MARKET SHOWED SIGNS OF SLOWING BEFORE COVID-19 CRISIS STRUCK

Monday, April 20th, 2020

NEWTON, Massachusetts – Even before the COVID-19 pandemic shuttered businesses, caused stock markets to plummet and halted many U.S. construction projects, a survey of architecture, engineering and construction professionals indicated that weaker conditions were already on the way. For the 4th quarter of 2019, design and construction industry firm leaders reported the lowest level of proposal activity in nearly a decade, according to PSMJ’s Quarterly Market Forecast (QMF), and the 1st quarter 2020 results showed more severe erosion in key markets amid the crisis.

Although continuing opportunities in the healthcare and water/wastewater markets kept proposal activity in positive numbers for the 1st quarter of 2020, it marked the third consecutive quarter with a net plus/minus index (NPMI) under 20%. The last time this occurred was from the third quarter of 2007 through the first quarter of 2008, which preceded a Recession-era year of declining proposal activity.

The NPMI expresses the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease. PSMJ’s QMF has proven to be a solid predictor of construction market health for the A/E/C industry since its inception in 2003.

After starting 2019 strong with back-to-back quarterly NPMI scores of 39%, the QMF recorded a steep decline to 19% in the 3rd quarter and 11% in the 4th quarter. The NPMI for proposal activity in the 1st quarter of 2020 was 17%, with slightly more than one-third of the respondents saying that proposal activity increased from first of the year through the end of March.

PSMJ’s Quarterly Market Forecast – Proposal Activity NPMI, 2015-2020

Of the 12 major A/E/C markets measured by the QMF, healthcare topped the field with an overall NPMI of 27%, followed closely by Water/Wastewater (24%). After that, the dropoff was sharp, with Transportation taking the bronze (7%), followed by Energy/Utilities (1%) and Environmental (-5%). The worst performing markets were both commercial – developers (-51%) and users (-47%). By contrast, Healthcare’s NPMI led the 4th quarter 2019 results at 55%, while Education trailed the pack at 23%.

“Close analysis of proposal activity reveals very sharp divisions in outlook by markets, some plummeting to levels not seen since the Great Recession.” said PSMJ Senior Principal Davis Burstein, P.E., AECPM. 

Among the 58 submarkets tracked, only 20 showed positive NPMIs. Healthcare submarket Medical Labs reported the highest level of activity at +27%. Predictably, the Restaurant submarket performed worst (-75%). Multifamily housing, which has consistently displayed some of the strongest activity in the past decade, was relatively flat (-2%), while other housing markets such as condos (-28%), single family developments (-28%) and single-family homes (-31%) slumped badly.

“I expect to see a rapid rebound in housing and commercial development once the health crisis passes and the impact of record-low interest rates starts to be felt,” adds Burstein. “Pent-up demand should make its presence felt by the end of Q3, and even more so in Q4 if we see movement on an infrastructure bill.”

PSMJ’s Quarterly Market Forecast – Best/Worst Submarkets 1st Quarter 2020

PSMJ has been using the QMF as a measure of the design and construction industry’s health every quarter for the past 17 years, assessing the results overall and across 12 major markets and 58 submarkets. The company chose proposal activity to gauge the AEC industry’s long-term outlook because it represents one of the earliest stages of the project lifecycle. A consistent group of over 300 firm leaders responds to the survey each quarter, including 289 for the most recent quarter.

For more information or to receive a copy of the full 60-page Quarterly Market Forecast report for 1Q20, contact Jerry Guerra at 781-718-2403 or at jguerra@jagg-group.com.

About PSMJ: For more than 40 years, PSMJ Resources, Inc. has been recognized as the leading publishing, executive education, and advisory group devoted completely to improving the business performance of A/E/C organizations worldwide. http://www.psmj.com

PSMJ Research Finds Uneven Impact of COVID-19 on A/E Proposal Activity

Wednesday, April 8th, 2020

Latest survey of architecture and engineering executives points to only minor construction delays and some markets seeing robust proposal activity

Countering uncertainty and confusion roiling world markets and economies, hard data from leading architecture, engineering, and construction (A/E/C) industry research and consulting firm PSMJ Resources, Inc. details the exact near-term and long-term impacts of the COVID-19 crisis.  

Published consistently since 2003, PSMJ’s Quarterly Market Forecast asks A/E/C executives about their projected quarterly revenue expectations, backlog changes, and their current outlook and proposal activity across major client markets. The data is reported in a Net Plus/Minus Index (NPMI). An NPMI value of 0% indicates an equal number of respondents are reporting growth as are reporting a decline. Data was collected from March 24-30, 2020, which means that COVID-19 impacts were a major factor in this data.

NPMI Values: Do You Expect Q2 Revenue to Increase or Decrease Compared to Q1?

While Q2 revenue projections show a sharp decline in market confidence, the outlook for proposal activity by client market is quite variable.  Unlike near-term revenue expectations, proposal activity is the most leading indicator of financial health since proposals lead to backlog which leads to revenue and then cash flow. Proposal activity in the Healthcare market turned in the highest NPMI value of 27%.  This means that more executives are seeing proposal growth – even in the COVID-19 crisis – than those who are seeing decline.  On the other end of the spectrum, the Commercial Development market came in at a -51% NPMI value – a clear indication of near-term trouble in this market.

Following are the five markets returning the strongest NPMI values:

“Close analysis of proposal activity reveals very sharp divisions in outlook by markets, some plummeting to levels not seen since the Great Recession.” said PSMJ Senior Principal Davis Burstein, P.E., AECPM.  “As A/E/C firm leaders plan for recovery and growth investments such as mergers and acquisitions, it is critically important to understand how strategic plans align with this data.”

It is worth noting that PSMJ’s research also showed that 61% of respondents reported either none or only minor project delays cancellations due to the virus. Additionally, 81% reported that they have not conducted any layoffs or furloughs due to the virus.  “44 out of 50 states have deemed construction an ‘essential’ activity” commented PSMJ Founder and CEO Frank A. Stasiowski, FAIA. “Particularly on public-sector and critical infrastructure projects, many of the CEOs we speak with report some near-term constraints due to physical distancing requirements, but they remain bullish about project funding and longer-term growth prospects.”

“I expect to see a rapid rebound in housing and commercial development once the health crisis passes and the impact of record-low interest rates starts to be felt,” says Burstein. “Pent up demand should make it’s presence felt by the end of Q3, and even more so in Q4 if we see movement on an infrastructure bill.”

To learn more about PSMJ’s Quarterly Market Forecast or to participate in the next survey, visit www.psmj.com/qmf.

Taylor Design Names Kevin Hinrichs President; Randy Regier Moves to Chairman

Thursday, December 5th, 2019

Kevin Hinrichs (left) and Randy Regier

Irvine, Calif. (December 5, 2019) —Taylor Design, an employee-owned architectural, interior design and design strategy firm, is pleased to announce that Kevin Hinrichs, AIA, LEED AP, principal and Northern California office leader, is the firm’s new president. D. Randy Regier, AIA, ACHA, who served as president for the past 16 years, becomes chairman of the board.

This leadership transition takes advantage of the skills and strengths of Hinrichs and Regier, and builds on their experience working together.

Hinrichs joined Taylor Design in 2013 and has 20 years of experience in architecture and design. In his role as president he will focus on the firm’s operations and infrastructure, including financial planning, business activities, organizational performance, and daily operations. Both Hinrichs and Regier will continue to serve in project leadership positions as well.

One focus for Hinrichs in his new role will be on the mutually beneficial relationship between Taylor Design’s staff and their clients. “As an employee-owned firm, we know that the contributions each one of us make not only impact the success of our clients, but also of everyone else in our company. I am passionate about inspiring and enabling our staff at Taylor Design to deliver value to our clients, which ultimately benefits us all,” said Hinrichs.

Regier joined the firm in 1994 and became its second president in 2003 when Linda Taylor, AIA, transitioned to chairman of the board. Regier will continue to focus on key client relationships, new business development, and special projects within the firm. Under his leadership, Taylor Design has grown from one office location to five across California, and expanded beyond healthcare design to include the higher education and science and technology market sectors.

Throughout its 40-year history, Taylor Design has embraced projects that contribute to positive experiences for people and the creation of greater possibilities. Its work includes modest facility remodels, new construction, and infrastructure improvements, as well as large-scale hospital replacements and master planning.

“The culture at Taylor Design has always been very entrepreneurial-minded, and it continues to be,” says Regier. “Our focus is evolving to provide the intangible aspects of success that include strategy-based design solutions, places and services. I look forward to continuing the growth of this firm as we enter this new phase of leadership.”

About Taylor Design: Taylor Design is a strategy-based design firm with practices in Architectural Design, Interior Design and Design Strategy; with offices in Northern and Southern California. Since 1979 the firm has built a national reputation in the healthcare design industry and has since established a growing presence in the education, science & technology, and senior living market sectors. Taylor Design works with clients to discover, develop, and design solutions for the built environment. Clients of the firm have included: UCSF Medical Center, San Francisco; Stanford University; SLAC National Accelerator Laboratory; UC Berkeley; San Mateo County; Scripps Health, San Diego; UC San Diego Health System, San Diego; Sharp HealthCare; UC Irvine Health, Orange County; Hoag Health Network, Orange County; as well as numerous service areas for Kaiser Permanente, among others. For more information on the firm visit www.WeAreTaylor.com

Multifamily Market Solid – PSMJ via BD&C

Thursday, November 14th, 2019

The Multifamily housing market has been remarkably steady and strong for several years, and the most recent Quarterly Market Forecast (QMF) from PSMJ Resources suggests more of the same going forward. Click on the link to read the article in Building Design & Construction. https://www.bdcnetwork.com/multifamily-construction-market-remains-strong-heading-2020

No Signs of Downturn for Construction Industry

Thursday, September 5th, 2019

NEWTON, Massachusetts – Despite talk of recession sparked by weakening economic indicators, the outlook for the construction market remains strong and shows no signs of a slowdown, according to a survey of proposal activity among design and construction industry leaders.

The Quarterly Market Forecast (QMF) for the 2nd Quarter of 2019, produced by consulting and publishing firm PSMJ Resources, reports that over half (51.4 percent) of the nearly 200 surveyed architecture, engineering and construction (AEC) professionals said that proposal activity across all markets increased in the quarter. This is compared with only 12.0 percent that saw a decrease. The remaining 36.6 percent reported that proposal activity stayed about the same in the April through June survey period.

The healthy 39 percent Net Price/Minus Index (NPMI) in the 2nd quarter matched the index level from the 1st quarter. PSMJ’s NPMI measures the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease. It has proven to be a solid predictor of market health for the AEC industry since its inception in 2003.

“In the longest economic expansion in U.S. history, it is only natural to contemplate when it will end,” says PSMJ’s Greg Hart. “Similarly, A/E/C firms have enjoyed a long stretch of prosperity that has the worriers among us anticipating when the proverbial other shoe will drop. Even though some economic indicators suggest a weakening confidence in the outlook for our industry, the QMF tells us that there is still plenty of fuel in the tank for A/E/C firms enjoying a prolonged boom market.”

PSMJ has been using the QMF as a measure of the A/E/C industry’s health every quarter for the past 16 years, assessing the results overall and across 12 major markets and 58 submarkets. The company chose proposal activity to gauge the AEC industry’s long-term outlook because it represents the earliest stage of the project lifecycle.

The QMF faltered in advance of the Great Recession, dropping 15 percentage points in the 3rd Quarter of 2006 and sinking to its lowest level in the index’s history at the time. It also presaged the recovery, with the index returning to positive territory six months before the downturn ended.

Among the major market sectors measured, Energy/Utilities recorded the highest NPMI at 62 percent, with Housing (59 percent) a close second. Healthcare (52 percent), Environmental (49 percent) and Transportation (47 percent) rounded out the “Hot Five” markets in the 2nd quarter.

Continuing Care Facilities (70 percent) and Medical Offices (51 percent) were the two highest-performing submarkets in Healthcare, while Utility Distribution (62 percent), Renewables (58 percent) and Telecom/Cable (51 percent) were standouts in Energy/Utilities. Senior Living Facilities (69 percent) and Multifamily for Rent (52 percent) drove the Housing market’s strong results. Retail Buildings for Lease (-4 percent) was the only submarket reporting a negative NPMI among the 58 assessed, but other submarkets in that category picked up the slack, including Warehouse Distribution facilities with an NPMI of 31 percent.

As Predicted in 2018 A/E/C Firm U.S. Market Forecast, Warehouses Are On A Roll

Tuesday, August 13th, 2019

In ranking “Industrial/Warehouses” as the strongest market of the 41 assessed, the PSMJ 2018 A/E/C U.S. Market Forecast stated, “All the latest retail trends – skyrocketing use of ecommerce, last-mile delivery, robotics and so on – leave the warehouse sector woefully undersupplied. Best market hands down and it should last a while.”

This was borne out recently in a June 2019 report released by real estate company CBRE. It noted, “Demand continues to outpace a four-year surge in warehouse development—much of it speculative—and allay any fears about overbuilding. There currently is more than 255 million sq. ft. of warehouse space under construction, 70.2% of it on spec. Since 2015, however, warehouse demand has outpaced new warehouse completions by 169 million sq. ft. and rents have increased by 19.2%,” according to CBRE Econometric Advisors.

CBRE reported that 5 of the top 10 markets for speculative development have market conditions that justify adding more big-box warehouses: vacancy rates below or slightly above the national average (4.4%) and aggregate net asking rent growth of 7.8% annually. So the boom is unlikely to end any time soon.

The remaining five markets were well above the national vacancy average and their aggregate rent growth averaged 4.6% due to more available supply.

“With demand not likely to diminish, speculative big-box developments in those five markets are expected to lease up shortly after completion. E-commerce, food & beverage, wholesaler and third-party logistics users, which have dominated pre-leasing activity, are the best candidates to occupy these new modern warehouse facilities,” the report concluded.