The dawn of the new year is the traditional time to take stock of business conditions. This year presents some changes in recent trends for the AEC industry. The residential building boom that has been with us for several years appears to be over. Other sectors, however, are showing signs of strength. Overall, unless your firm specializes in single-family home developments, 2007 for most design and construction firms should be a pretty good year.

The American Institute of Architects (AIA) is projecting “a healthy outlook for the non-residential construction market throughout 2007.” The AIA’s Architecture Billings Index (ABI), a leading economic indicator of construction activity, showed modest growth in October. The October ABI rating was 51.1 (any score above 50 indicates an increase in billings), and inquiries for new projects was 62.7. The latter figure bodes well for 2007 for design and construction firms alike, as there is an approximate nine to twelve month lag time between architecture billings and construction spending.

According to the AIA, “sustained demand for non- residential projects should continue to offset the lagging housing market’s effect on the overall economy, and future growth in construction activity will come primarily from the commercial, industrial, and institutional markets."

Responses to a December Economic Indicator Survey that gauges current business conditions for hundreds of firms working in the built environment by PSMJ Resources, Inc., indicated that the hottest markets for 2007 are education and healthcare, with 41% and 39% respectively reporting that opportunities in these markets will increase. The survey by the Newton, MA-based provider of business intelligence to the A/E industry also shows that the coolest markets for 2007 are heavy industry and housing, with only 11% and 19% respectively reporting that opportunities in these markets will increase. These findings are a continuation of a trend in decreasing opportunities in these two markets, according to PSMJ.

A few other commercial sectors are on the rise, according to The Associated General Contractors of America (AGC). “Lodging construction - mainly hotels and resorts - leaped 8 percent in October and was up 70 percent from the October 2005 level,” says Ken Simonson, AGC chief economist. “The multi-retail category, covering shopping centers and malls and general merchandise stores, rose 1.3 percent in October and 36 percent compared to the year-ago month. Private electric power construction was up 3.3 percent for the month and 26 percent relative to October 2005.”

There is also positive news in the residential sector, according to Simonson. “New multi-family construction climbed 1.6 percent in October and 15 percent compared to October 2005, while improvements rose 1.5 percent and 4.9 percent. But those numbers were swamped by declines of 3.9 percent and 17 percent for new single-family construction.”

Regional variations in business conditions may be quite pronounced during 2007, if recent indicators hold up. “Regional readings were unusually volatile in October,” says AIA Chief Economist, Kermit Baker. “Firms in the Midwest had been reporting weakening conditions in recent months; however, the October score rebounded to its strongest pace of growth since the first quarter of the year. Firms in the South and West reported continued growth, but the pace of growth was down from recent months. Finally, firms in the Northeast reported only their second decline in billings since late 2003.”

At SullivanKreiss, we’ve noticed a few trends based on demand for certain skills. Land development specialists and landscape architects, particularly those with 5-10 years of experience are in very high demand. There’s also a hot market for architectural designers, especially those with experience in mixed- use development, which is a popular market for new development in many areas of the country.

Regionally, the Washington DC area, the Carolinas, Georgia, Florida, and California continue to spawn many types of new development. Demand for transportation and traffic engineers and for designers with experience in senior housing and healthcare is high in the Midwest.

Whatever your line of business or specialty, we at SullivanKreiss wish you all a happy and prosperous new year!

What do you think? Let us know.

Justin Roy is Director of Midwest Operations for SullivanKreiss, an executive recruiting firm focused on architecture, landscape architecture, planning, and engineering. He can be reached at 312-893-5058 or by e-mail.