March 30, 2020

COVID-19 stalls demand for design services

The American Institute of Architects said Friday that architecture firms in the U.S. are seeing a big drop in demand for design services due to the COVID-19 pandemic.

A March 23 AIA survey found that 50 percent of architecture firms reported fewer new design projects for March compared to their expectations entering the month, the AIA said in a press release.

In terms of work on active projects, 83 percent of the firms are anticipating a decline in revenue for March relative to their expectations heading into the month, with over one-third estimating their revenue will be at least 10 percent below expectations.

AIA said this situation is anticipated to worsen in April, with 94 percent of firms expecting revenue declines, and 57 percent anticipating that the revenue falloff will exceed 10 percent.

Additionally, two thirds of responding firms reported that they have seen prospective project inquiries or negotiations for new projects moving more slowly or completely stopping due to issues related to the COVID-19 outbreak, with 17% saying many prospective projects have slowed or stopped, and 50% saying some projects have slowed or stopped. However, 33% reported that all prospective projects were still moving ahead as expected.

“Like most other businesses, U.S. architecture firms are heading into uncharted waters regarding what the economy holds in store for them as the COVID-19 pandemic plays out globally,” said AIA Chief Economist Kermit Baker. “Different businesses are feeling the impact of the slowdown differently.”

Beyond billing activity, 48 percent of the firms indicated that all, or almost all, of their staff are now working remotely, while 31 percent said some of their staff are. Few firms reported a major impact to their staff due to family/personal reasons, but 15 percent said at least some of their staff are currently unable to work at all.

The findings are in a special report by AIA, which focuses on the immediate impact of the pandemic on U.S. architecture firms. It is at https://tinyurl.com/wlsd67j/.