We have news to report. The data is in on business trends for the annual Interior Design Rising Giants, the 100 largest firms after our top 100 Giants. However, there’s a catch: It’s 2020. Which means our entire world is in various stages of flux—actually, upheaval may be a better word. No one knows what will happen next week, let alone next year. So while these new numbers can give you a fine idea of what kind of year the Rising Giants had in 2019, all bets are off on guessing how the design industry and the economy overall will weather the rest of 2020 and beyond.
Business has been strong for these Rising Giants—in 2019 and the years leading up to it. Total fees for the year came in at $604 million, a sizeable 21 percent jump from the previous year’s $500 million take. That’s stellar, but the Rising Giants’s forecast of $640 million for 2020—less than 6 percent growth and the lowest forecast in five years—is about as tangible as a puff of smoke. We just don’t know.
What we do know: Hospitality has overtaken corporate work as the biggest moneymaker for the group. The former brought in $195 million, 32 percent of all fees in the group (up from 28 percent in 2018), while the latter fell to $173 million, or 29 percent (from 33 percent in 2018; the two sectors have essentially traded places).
Healthcare (11 percent) was the only other area to reach double digits as a percentage of the overall pie. Other sectors—education, government, retail—racked up single-digit percentages of total fees, though one area in particular, residential, has trended downward from 13 percent in 2016 to 8 this year.
Work volume was a big reason for the bump in overall fees. The Rising Giants finished just over 70,000 projects last year, totaling 332 million square feet. The second figure is massive compared to the 221 million square feet logged in 2018. That may be an outlier, but these Giants still made a pre-pandemic prediction of 361 million square feet in 2020.
Volume was up as well for furniture-fixtures and construction product installation in 2019, with $19.8 billion, up from $18.7 billion the previous year (construction takes 69 percent of the total). That may sound impressive, but the new total falls well short of the original forecast of $22 billion. Still, for some perspective, consider that the furniture-fixtures/construction total back in 2015 was $9 billion.
The Rising Giants do the majority of all this work in the U.S. Only 15 percent is done outside the states (the 100 Giants do 23 percent globally). The locations aren’t surprising: Canada, Europe, and Asia/Pacific Rim. What is surprising about the percentage? It’s almost triple the 6 percent rate from 2018. The vast majority of Rising Giants expect the U.S., particularly the Northeast, to be busier than previous years business-wise, though it will be interesting to monitor that overseas growth.
In-house, 3,261 designers produced a median fee per staffer of $197,000 and a median fee per square foot of $102 (that’s the highest total since $77 in 2017). The Rising Giants are employing about 500 more design staffers than 2018, but salaries haven’t budged much. Designers make about $70,000, project managers $109,000, and principal/partners $175,000. Time, generally, is well spent with 81 percent of hours billed to clients. Finding great new employees is a core business concern among the Rising Giants. Twice as many claim “recruiting qualified staff” is more important than retaining staff. With all that work, perhaps this isn’t surprising.
As far as clients, the Rising Giants still grapple with the holy trinity of client, firm, and the project at hand. “Getting clients to understand value” and “pay what a job is worth” remain major business concerns, as well as “dealing with clients’ increasing demands.” Part of the issue is clients becoming more educated about the process. “They are becoming more sophisticated in their expectations of design and project delivery,” a firm representative from Figure3 says. Others chime in as well about “hands-on,” “more engaged,” and “savvy” clients. Which isn’t necessarily a bad thing, as more communication can lead to better understanding of value—and better design. But it will be interesting to see how this development will affect the business going forward.
As for 2020, we’ll have to see what happens and hope for the best—and a miracle or two. The phrase unprecedented times may be played out, but that doesn’t make it any less true. Stay safe, and good luck out there.
The second installment of the two-part annual business survey of Interior Design Giants comprises the second 100 largest firms ranked by interior design fees for the 12-month period ending December 31, 2019. The first 100 Giants firm ranking was published in January. Interior design fees include those attributed to:
- All types of interiors work, including commercial and residential.
- All aspects of a firm’s interior design practice, from strategic planning and programming to design and project management.
- Fees paid to a firm for work performed by employees and independent contractors who are “full-time staff equivalent.”
Interior design fees do not include revenues paid to a firm and remitted to subcontractors who are not considered full-time staff equivalent. For example, certain firms attract work that is subcontracted to a local firm. The originating firm may collect all the fees and retain a management or generation fee, paying the remainder to the performing firm. The amounts paid to the latter are not included in fees of the collecting firm when determining its ranking. Ties are broken by the dollar value of products installed. Where applicable, all percentages are based on responding Giants, not their total number. The data was compiled and analyzed by Interior Design and ThinkLab.