WA100 2024: Back to reality for the world of architecture

After a bumpy three years the 2024 survey of the world’s 100 largest architectural practices suggests a sense of normality is returning to feelings about future work prospects. Optimism collapsed in 2021 after the pandemic and was followed by almost unprecedented hope in 2022 as pent-up demand boosted work prospects. The war in Ukraine, rampant inflation and a retreat from globalisation saw optimism drop back last year. This year the balance of optimism and pessimism for work prospects has recovered to match almost exactly that of 2020 just before the pandemic hit.

A significant change for 2024 is where the growth in prospects will come from. Saudi Arabia has leapfrogged from fourth place for most promising growth last year to the top of the chart this year – and by a considerable margin. Desert mega-development Neom, with its 170km-long city The Line, may have grabbed all the headlines, but this is only one of 14 giga-projects taking place in the country. These have proved to be a magnet for international firms – most of the top 10 practices have offices or are involved in projects in the country. This optimism doesn’t seem to have been dimmed by Saudi Arabia’s questionable human rights record. The Israel-Hamas conflict seems to have had little impact either.

On the flip side China, which a few years ago was enjoying levels of growth that put Saudi Arabia’s in the shade, has slipped backwards thanks to a more repressive and inward-looking regime and the damage inflicted by lockdowns that dragged on for years after the rest of the world had returned to normal. Architects report the residential market has all but collapsed and that local design institutes are taking on work formerly done by international practices.

The fickle nature of the sources of international work hasn’t affected the biggest architectural firms, which are well diversified in terms of their breadth of expertise and international presence. The big practices continue to get bigger, although Gensler – which was the first firm to break through the 3,000-architect barrier last year – is four architects down this year. But there is little risk of a challenger upsetting Gensler’s position at the top of the rankings as it is easily 1,000 architects clear of the next-biggest firm, Arcadis. It has come from nowhere by virtue of acquisition and consolidation.

The balance of optimism and pessimism for work prospects has recovered to match almost exactly that of 2020 just before the pandemic hit

The global consultancy giant acquired sixth-placed IBI last year, and the combination of IBI and CallinsonRTKL – which has been owned by Arcadis for the past decade – was enough to push it towards the top of the table. This has caused upset lower down as many of the other top 10 practices have been pushed down the rankings despite increasing their headcount. Japanese practice Nikken Sekkei has slipped two places to fifth despite marginally increasing its number of architects, and HKS and DLR Group have also been pushed down one place each despite rising numbers. Europe’s next‑largest practice, Sweco, has clung onto fourth place by virtue of an acquisition spree this year which saw it buy 10 firms and increase architect numbers by 16%.

This steady uptick in numbers is reflected in the jobs market, which has been very competitive since the pandemic. Only 4% of practices expect to hire no staff this year and over 60% don’t anticipate letting any staff go, while 41% expect to hire between 11 and 30 architects. Some practices report that the slowdown in China has released skilled architects onto the market and the boom in remote working means that some of these can be redeployed to the booming Middle East without having to relocate.

What does 2024 hold for the profession? The North American market is likely to stay buoyant, with billions of dollars of Biden’s Inflation Reduction Act money still unspent and some of this likely to find its way into architecture, particularly for healthcare and facilities for green technologies. The risks associated with outsourcing manufacturing to China means increased demand for new manufacturing facilities at home. Falling interest rates in the US will also help, although it remains to be seen what impact a second Trump presidency might have on confidence, should he get elected later this year.

Western Europe remains in the doldrums because of high inflation and interest rates, large deficits and weak productivity. Falling interest rates should help, but there are no indications that Europe is going to provide the same work prospects as the US, the Middle East and Asia. For many firms looking to diversify or expand, the Middle East – particularly Saudi Arabia – offers perhaps the best opportunities, provided they can tolerate the sometimes unpredictable nature of the clients, including difficulties getting paid and the compromises that come with living in that part of the world.

A trend to watch for 2024 is the development of machine learning, which has the potential to be highly disruptive. Generative capabilities are already built into design software and this is likely to become more sophisticated as machine learning technology develops – which is happening at a rapid pace.

As always, the practices that are diversified in terms of skills, markets and ability to leverage the advantages offered by new technologies will be best placed to manage the ups and downs of the year ahead.

Thomas Lane, WA100 editor

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