2011 2nd 100 Giants

Just as certain professions-doctors, nurses, medical technicians-have been deemed recession-proof, health-care projects, including assisted living, were the jobs-to-have for interior designers, according to our annual survey of the second 100 Interior Design Giants firms.

Although down from prerecession days, health care clearly gave these Giants a shot in the arm. Interior design fees from this segment went up nearly 50 percent from just two years ago and are now more than $37 million. This represents an astonishing jump from 9 to 13 percent of total fees for the group.

Industry watchers pay special attention to this segment. With fewer “star” projects, which throw off averages, health-care is possibly the best indicator of general trends, and that proved to be the case with this survey. Total­ design fees were up 2 percent, to?$278 million, compared to the 40 percent nosedive reported last time.

In other words, fears of a double dip?seem to have dissipated. Layoffs continue-the second 100 Giants let 4?percent of their design staff go-but?the previous 35 percent pink-slip massacre seems to be in the past. For the designers who survived, salaries were flat, and reports of unpaid overtime and vacation days were common, but at least there was stability.

This stability was bolstered partly by the aggressive pursuit of segments that received short shrift in the past: not only health care but also related, overlapping sectors such as government and educational. (A quarter of all “government” work dealt with medical facilities.) Over half these Giants worked for government agencies, bring­ing in over $9 million, up $2 million from two years ago. Educational work, mostly colleges and universities, simultaneously rose by more than $5 million.

At first glance, all that public-sector work seems logical in the era of the American Recovery and Reinvestment Act. But these Giants reported only a 15 percent boost from the stimulus package. One explanation is that some government and health-care activity is outside the U.S.-work abroad has been on a slow rise since 2006.

Foreign projects generated more than 11 percent of the group’s revenues. Over half these Giants already report building in Asia, and 24 expect continued growth in China. One new Giant, the first to be based in Shanghai, worked exclusively outside the U.S. during the study period: EDG Corporation employs the group’s second-largest staff, including the highest number of designers.

Trending away from expectations is the green sector. Fewer of these Giants offer sustainability analysis-even as eco-related fees rose, and the commitment to LEED guidelines strengthened. It’s a bit of a paradox that, while more green square footage was completed, the number of firms citing sustainability as an important factor in design decisions fell to 86 percent from 92 percent a year earlier. Of course, there are exceptions. One Giant collected 100 percent of fees from green design, with most of the products specified being sustainable as well. Retrofits also reached the highest levels ever reported, 100 percent at five firms.

So, with cost cuts already in place, these Giants appear poised for a pos­itive year, and they seem to agree that?the most important thing is not to hide their light under a bushel. As one spokes­person put it, “We have begun a concerted effort to increase our reputation as experts in our field and to generate a sense of familiarity between our clients and the members of our team.” To help that happen, several Giants are making more appearances at industry events and forays into the realm of social media. “We’ve encouraged all staff to be creative marketers,” another respondent says. Welcome to the Twitter-verse.

*Karlsberger and Cheryl Rowley Design were originally ranked as #155 and #164 respectively in the July issue.  We learned of their closing after the July issue went to press.
Had the firms not been included in the Giants ranking, BG Studio International and TEK Architects would have been ranked #199 and #200 respectively.

ID Fee, Dollar Value and Square Footage numbers are in millions

NR – not reported

Issues Most Affecting Design Firms