The Second 100 giants outdid themselves during the most recent reporting period by racking up a grand total of $337,244,986 in interior design fees, an increase of 25.2 percent, and more than 11 percentage points over their original projections. To be sure, these Second 100 are actually 103, four firms having tied for last place, but even if those additional firms had not existed, the increase would have been an impressive 23.2 percent.
Interior design accounted for an average of 74.3 percent of earnings, an increase of 37.5 percent, and almost 16 points more than the Top 100 Giants. Thirty-three of the firms practiced interior design exclusively, almost twice the number of the Top 100 Giants. On average, new construction accounted for 52.3 percent of their projects; 94.7 percent of the jobs were within the United States, and while 54 firms reported no foreign work, one reported that all projects were overseas, and another four reported 40 percent or more were overseas.
The traditional creation of environments accounted for 76.9 percent of interiors earnings, a drop of roughly 3 points, while specifying and purchasing rose about 1.5 points to 6.48 percent; the only other activity with a significant rise was consulting, which went from 0.49 percent to 2.05 percent. Strategic planning dropped from 3.17 percent to 2.45 percent.
The Second 100 Giants were sole designers on 86.5 percent of their projects and lead designers on 9.5 percent; 55.5 percent of earnings came from multi-project work for single clients, roughly the same as last year and just 1.3 points under the Top 100 Giant ratio. Eighty-two of the Second 100 Giants reported that repeat clients were most likely to come from the corporate office sector, 43 said from the financial industry, 34 said hospitality, 23 said health care, 22 said education, 22 said government, 18 said retail, 16 said residential, 12 said entertainment, 5 said museums and galleries, 4 said senior and assisted living, 3 said transportation, and 2 each said communications and technology. Single mentions were received by religious facilities, aviation, broadcasting, media, new media, housing and time shares.
Furniture, fixture, and construction expenditures totaled $6,881,643,323, up 13 percent; an 18 percent increase is projected for the next reporting period. Together, the Second 100 Giants handled 140,141,630 sq. ft., a minuscule increase nowhere near their projection of 12 percent; a 15.8 percent increase is projected. Residential furniture and fixtures topped the scale with average expenditures of $96.53 per sq. ft., followed by "other"—a category that includes telecommunications, country clubs, technology, science, museums, and entertainment—at $76.79, restaurant back of house at $69.58, hotel public spaces at $60.98, restaurant front of house at $56.88, retail at $51.62, health care medical areas at $39.21, hotel guest quarters at $37.75, hotel function areas at $36.47, finance at $33.66, offices—which account for almost half of the Second 100 Giant practice—at $31.78, health care administrative areas at $26.20, hotel administrative areas at $25.67, education at $24.08, and government at $21.58.
Among firms that charge by the sq. ft. or as a percentage of project cost, residential was the top moneymaker, averaging $20.13 per sq. ft., and 16.6 percent of cost. Fees take a big dip from there to 10.9 percent for retail and "other," 10.5 percent for restaurant front of house, 10.2 percent for offices, 9.2 percent for finance, 7.9 percent for health care medical areas, 7.6 percent for health care administrative areas, 7.5 percent for hotel public spaces and restaurant back of house, 7.0 percent for hotel function areas, 6.8 percent for education and government, 5.9 percent for hotel guest quarters, and 5.2 percent for hotel administrative areas.
The dip is equally dramatic for those who charge by the sq. ft., with restaurant front of house averaging $11.20, hotel public spaces $9.06, retail $8.15, hotel function areas $5.64, restaurant back of house $5.43, hotel guest quarters $4.97, health care medical areas $4.74, financial $4.48, education $3.66, offices $3.24, hotel administrative areas $3.12, "other" $3.05, government $2.70, and health care administration $2.61. For those that charge by the hour, the most profitable, on average, was hotel public spaces at $96.50, with a steady gradual descent to restaurant back of house, the least profitable at a close $80.85.
Fourteen Second 100 Giants foresee new opportunities opening up in hospitality; nine in commercial work; seven in technology; three each in senior and assisted living, culture and museums, government, education, and entertainment; two each in finance, law, retail, and mixed use; and one each in advertising, aviation, residential, renovation, and showrooms. New opportunities for diversification include consulting, facilities management, specifying, feasibility studies, and long-range planning. Three each see openings in Europe and Asia, while two each see new opportunities in Latin America and the East Coast, Midwest, and Southwest regions of the U.S.
At the time the surveys were due, it still wasn't quite clear to many of us whether the NASDAQ was having a fit of indigestion or needed a long course of rest and rehabilitation, and 27 of the Second Giants assumed that opportunities in the technology sector would continue to grow. Nineteen saw continued growth in hospitality; ten in commercial; nine in residential; six in education; five each in retail, and senior and assisted living; four in finance; three in health care; two in government; and one in museums. Continued growth was projected in strategic planning, facilities management, and move management. Seven Second 100 Giants found expanding opportunity in the South, three each in the Southwest and on the East Coast, and two in Canada; only one thought opportunity was growing internationally.
Eighteen of the Second 100 Giants believe hospitality is saturated, 12 office, 11 tech, 5 retail, 4 assisted living, 3 entertainment, and 2 finance; one each found education, government, heath care, legal, renovation, and residential saturated. Saturated regions include the Northeast, the Southeast, southern California, and Chicago, Dallas, Las Vegas, Omaha, and the District of Columbia. Six respondents said technology is on hold, 3 said finance; 2 each said hospitality, office, retail, assisted living, and new construction; one each said entertainment, health care, and residential. Geographical areas on hold are the Northeast, Asia and the Middle East. In practice, facilities management, professional services and the implementation of planning and feasibility studies are either saturated or on hold.
Seventy of the Second 100 Giants calculate their fees in dollars per sq. ft., 61 use percentage of total project cost, and 54 use dollars per hour; the numbers add up to well over the number of Second 100 Giants because 31 use two methods, and 29 use all three.
Interior design staff totaled 2,820, up 12.3 percent from the previous reporting period. Principals and partners account for 10.1 percent of total Second 100 Giant staff with an average of 2.9, almost 5 percent lower than last year, but two thirds higher than the Top 100 Giants—not necessarily a sign of top-heaviness but more a reflection of the sheer number of people it takes to steer design firms regardless of size. A more interesting comparison might consider firms that get by with 40 percent fewer principals and partners than firms with staff one quarter the size, and how those firms rank among the Giants (you might be surprised, but the data is confidential).
An accompanying chart shows the proportion of staff devoted to each job title. Compared with the Top 100 Giants, this group employs 9.3 percent more project managers per capita, 15 percent fewer designers, 37.9 percent more CAD operators, 18 percent fewer manual drafters, 4 percent fewer marketing and business-development specialists, almost 45 percent fewer "other billable" (a sign, perhaps, that Second 100 Giants are more meticulous about detail), and 27.8 percent more non-billable (a sign, perhaps, that the Second 100 Giants are not billing out all that they could).
Another accompanying table indicates median salaries and hourly charges. All job titles saw increases in salary: 16.6 percent for "other billable" such as associate and junior designers, interns, architects, furniture specialists, resource librarians, and administrative, graphic and technical support; 11.1 percent for CAD operators; 6.2 percent for project managers; 5.9 percent for manual drafters (putting them on an equal footing with CAD operators, who last year earned 6.25 percent less), 5.68 percent for principals and partners, 4.1 percent for marketing and business development, 3.8 percent for non-billable design staff, and 2 percent for designers.
These figures show the Second 100 Giants paying designers 14.9 percent less than the Top 100 Giants, "other billable" 12.5 less, project managers 9.6 percent less, non-billable design staff 4.3 percent less, CAD operators the same, and principals and partners 2.84 percent more.
The median hourly rate at which the job titles are billed increased 8.3 percent for manual drafters; 7.6 percent for CAD operators; 7.4 percent for principals and partners; 5.2 percent for project managers, directors, and job captains; and 2.5 percent for designers; the billing rate for "other" remained the same. These increases leave the Second 100 Giants charging 13 percent less than the Top 100 Giants for manual drafters, 11 percent less for principals and partners, 9.8 percent less for "other billable," 9 percent less for project managers, 3.5 percent less for designers, and 2.9 percent more for CAD operators. The Second 100 Giants tended to pay manual drafters slightly more than CAD operators but billed them out for less.
During the survey period, the average Second 100 Giant interior design employee earned $133,576.64 for his or her firm, with a high of $300,000, a low of $28,670, and a median of $123,133. The maximum per-employee earning figure is less than half that of the Top 100 Giants, the minimum is a third lower, and the median a quarter lower. The average Second 100 Giant bills 82.8 percent of its professional time, 1.3 percent more than last year, and just 2.2 percent less than the Top 100 Giants.
Annual Salaries (Median)
|Other billable design staff||$35,000|
|Non-billable design staff||$33,500|
Hourly Rates (Median)
|Other billable design staff||$55|
10 Fastest Growing Firms in Second 100 (By Fee)
|Company||1999 ID Fee||2000 ID Fee||% Change||Rank|
|Gerner Kronick & Valcarcel Architects||$1,647,000||$4,472,000||1.72||115|
|Kapell and Kostow Architects||$1,000,000||$2,500,000||1.50||180|
|EDI Architecture, Inc.||$1,000,000||$2,470,000||1.47||181|
|Farrington Design Group||$2,348,500||$4,395,200||0.87||118|
|Symmes Maini & McKee Associates||$2,100,000||$3,870,000||0.84||127|
|TRO/The Ritchie Organization||$1,100,000||$1,950,000||0.77||194|
|Fox & Fowle Architects, P.C.||$1,076,550||$1,800,000||0.67||200|
|Cubellis Associates Inc.||$2,310,000||$3,654,486||0.58||134|
|Interform - Designers of Commercial Interiors||$1,944,601||$2,929,522||0.51||161|
Companies New to Second 100 Giants
|Company||ID Fee||2000 Rank|
|McCall Design Group||$5,280,000||104|
|Milo Kleinberg Design Associates, Inc.||$4,500,000||112|
|Carson Design Associates||$3,442,200||142|
|Mojo Stumer Associates||$3,200,000||154|
|Morris Architects Inc.||$2,773,000||166|
|Hardy Holzman Pfeiffer Associates||$2,700,000||171|
|ABA Avery Brooks & Associates||$2,558,651||174|
|Kapell and Kostow Architects||$2,500,000||180|
|EDI Architecture, Inc.||$2,470,000||181|
Top 24 Companies New to the List (Not in the Top 200 Last Year)
|Company||ID Fee||2000 Rank|
|Vocon Interiors, Inc.||$2,300,000||185|
|Babey Moulton Jue & Booth||$2,290,000||186|
|R.D. Jones & Associates, Inc.||$2,201,500||187|
|Engstrom Design Group||$2,081,939||190|
|Interior Resource, Inc.||$1,951,120||191|
|TRO/The Ritchie Organization||$1,950,000||194|
|Noelker and Hull, Inc. Architects||$1,800,000||199|
|Fox & Fowle Architects, P.C.||$1,800,000||200|
|Howard Sneed Architecture and Design||$1,800,000||200|