Tuesday, January 27, 2009

2009 A/E Industry Forecast Webcast Recap

PSMJ consultants David Burstein and Bill Fanning presented Part 1 of their 2009 A/E Industry Forecast webcast earlier today with a focus on the private sector markets. (Part 2, which happens tomorrow, will look at the public sector markets.)

We won't go through the entire webcast here (you can order it by visiting www.psmj.com) but I did want to take a quick look at some of their market sector forecasts for 2009.

Burstein sees excess inventory causing the housing market to continue declining through the first half of 2009. That decline will create a "bottom" for home design, perhaps as early as this summer, but subdivision design will continue to deteriorate through 2009 and into 2010. Affordability will reach a new high this year. And, when the recovery comes, its strength will surprise a lot of people.

In the commercial real estate market, Burstein predicts a "disaster" for commercial developers, but we won't see the bottoming-out point until 2010 at the earliest. Lots of developers will expect their design firms to become their banks, and users will be less affected by the credit crunch than commercial developers. Low-end providers, such as Wal-Mart, will fare best.

In the industrial market, short-term indicators point to a very weak first half of 2009. Longer-term indicators are mixed, but expect considerable volatility starting in late 2009.

In the energy/utility market, proposal opportunities may start to decline in the first half of 2009, but new federal funding should kick in by the second half of the year and this market should remain strong for several years, Burstein believes. Even though Burstein sees a flattening or slight decline in the first half of 2009, he adds that long-term the market looks very strong.

In the environmental market, Burstein says that hazardous waste markets are in a long-term decline. "They're just not making hazardous waste sites like they used to. In the long run, this market is essentially going away." Other environmental markets depend on legislation ("people tend not to spend money on things unless they have to," Burstein says.) Conventional wisdom dictates that Democrats will pass more environmental legislation than Republicans, but Burstein says that's not what happened under the Clinton-Gore administration. This time, expect environmental regulations to be tied to energy independence.

In the health care market, short- and long-term trends are all positive, Burstein says. "More firms are getting into this market." The biggest danger is oversaturation and keep an eye out for overseas opportunities.

Burstein also gave a subjective ranking of the following markets-- health care, environmental, energy/utilities, industrial, commercial, and housing-- by short-term prospects, long-term prospects, and relative profitability. He said that health care has the best short-term prospects, along with the environmental and energy/utilities markets. Long-term, energy/utilities and health care have the best prospects. In terms of profitability, health care, industrial, and energy/utility are projected to fare best. Overall, he said that health care and energy/utilities have the brightest prospects.

For more information on how to order a recording of today's webinar or tomorrow's Part 2, visit www.psmj.com. Also, be sure to check out The Obama Infrastructure Plan: A Supplement to PSMJ's 2009 AEC Firm Market Sector Forecast. This comprehensive report goes into painstaking detail to show you the impact of the proposed economic stimulus plan on the AEC industry.


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