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As Design Activity Picks Up, Industry Sentiment Follows

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With a few exceptions, construction activity in the four-state Southeast region remains less robust than many builders would like. But the region's design firms are starting to sense a change in the market.

Image courtesy of Little
Wake Tech Community College in Raleigh is expanding with a new administration building.
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Responses to ENR Southeast's annual survey of Top Design Firms, which generates the ranking published here, increased significantly from a year ago, as did the firms' collective revenue. And industry sentiment appears to be on the rise.

"We're feeling much better and seeing much stronger activity in the marketplace as compared with last year," says J. Thomas Chandler, president and COO of SchenkelShultz Architecture, Orlando. Chandler cited a rebounding housing market in Florida as a possible sign of a broadening overall upturn.

"I think we're starting to see the beginning of another run," he says. "People are feeling more comfortable that there's legs to it this time, and it's not the start-stop cycle we've seen over the last five years."

ENR Southeast's ranking of design firms is also moving in the right direction. For this latest survey, 115 engineering and architectural firms working in Florida, Georgia and the Carolinas participated, an increase of roughly 25% compared with last year and the largest number of firms to have responded since 2008. The firms reported total revenue of just over $3 billion, up from the $2.3 billion reported a year ago.

A Widening Recovery?

Some firms, such as Charleston, S.C.-based LS3P, are seeing an increasingly diverse number of business opportunities. As a result, "we saw a lot of recovery last year," says Thom Penney, president and CEO of LS3P, which ENR Southeast profiles in this issue.

The Southeast construction and design industry has had to endure a hit-or-miss market in recent years—with some work types accelerating while others fizzled. However, some firms are starting to see multiple sectors gaining momentum simultaneously.

"Our increase in revenue for 2013 is due to an increase in number of clients and the volume of projects across our primary industry practice areas," John Komisin, president and COO of Charlotte-based Little, said via email. He also cited a "reawakening of developer and public markets"—including retail, office and health care—as growth areas.

In Florida, an expansion of the legal use of public-private partnerships to include any type of public project—instead of just infrastructure—is starting to produce activity in higher education, says Chandler.

"We are seeing clients begin to look at P3 options as a way of delivering classroom and other administrative infrastructure," he says. "There's no question that it is generating activity and that it is being looked at as an alternative to direct funding from the state."

At the same time, as overall market momentum broadens, certain geographic areas are starting to move ahead of others. The Atlanta metro area, for instance, with two major league stadium projects moving forward, could generate its highest contracts total in six years. McGraw Hill Construction forecasts just over $10 billion worth of new contracts in that area during 2014.

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