More from this creator
Other episodes by msa.
More like this
If you liked this, try these.
Transcript
The full episode, in writing.
Between 2015 and 2023, the share of national billings generated by small architecture firms in the United States fell by 50%. This shift happened as market pressures and changing client expectations pushed many commissions toward larger firms with more resources and technological capacity. The portion of billings handled by midsize firms also dropped by 40% over the same period. This decline was entirely offset by a 40% increase in the share of billings accruing to large firms, reflecting their ability to adapt quickly to evolving market demands and invest in new capabilities.
More than 19,000 architecture firms operate nationally, with the overwhelming majority classified as small businesses. About 28% of these are sole practitioners, and another 32% have between two and four employees. Despite their numbers, small firms have struggled to maintain market share in the wake of industry-wide disruptions, especially when responding to rising demand for advanced technology and specialized project delivery.
The 2024 Firm Survey Report highlights a growing divide in technology adoption. One-third of all firms reported using artificial intelligence in day-to-day work. However, 61% of large firms now use AI, compared to just 27% of small firms and 42% of midsize firms. This enables larger firms to deliver faster project turnarounds, provide more sophisticated client presentations, and optimize workflows. In Asia, where rapid urbanization and government incentives have fueled a construction boom, firms that quickly adopt new technologies often win major commissions, especially in historical preservation where digital tools can precisely document and restore heritage structures.
In 2023, 45% of architecture firm gross billings came from renovations, rehabilitations, retrofits, additions, and historic preservation activities. This proportion has remained stable since 2021, reflecting sustained demand for updating existing buildings rather than focusing solely on new construction. Asian markets, with dense urban cores and rich architectural legacies, have seen a rising share of work in historical preservation, as governments and private owners invest in maintaining cultural assets.
Billings from institutional projects made up 53% of all architecture firm revenue in 2023. This share surpasses the pre-pandemic level of 51% in 2019, indicating that adaptation to institutional client requirements—such as compliance with heritage guidelines and integration of new technologies into old structures—is critical. Institutions commissioning preservation work are increasingly seeking firms with demonstrated expertise in both conservation and cutting-edge digital modeling.
Within the residential sector, architecture firms received only 8% of their billings from single-family home construction or remodeling in 2023—even though these projects accounted for over 40% of all construction spending. This gap occurs because architects tend to focus on custom and historically significant homes, which require specialized knowledge and careful restoration techniques. In Asian cities with limited developable land and strong preservation regulations, this specialization has become a competitive advantage for firms adapting to the market.
Manufacturing construction in 2023 accounted for 12% of construction spending, but only 3% of design billings. The disparity shows that certain sectors, like manufacturing, rely less on architectural design services than areas such as historical preservation, where detailed planning and regulatory compliance drive up demand for specialized expertise.
Despite the fact that 75% of U.S. architecture firms have fewer than 10 employees, the ability to secure preservation commissions increasingly depends on visible investment in advanced software, digital documentation, and AI-driven analysis. This trend is mirrored in Asian markets, where historic building owners and local governments favor firms that can combine traditional restoration knowledge with the latest technological tools.