Three in five engineering consultancies expect to cut office footprint

Three in five architecture, engineering and consulting firms expect to reduce their office footprint, according to a survey from M&A and corporate finance advisory firm AEC Advisors.

The New York based firm – which works with premier sector clients such as Aecom, WSP, Arcadis and Stantec – surveyed 270 firms earlier this month. The consulting firm has been conducting regular surveys of the architecture, engineering and consulting sector since the pandemic began.

The surveyed firms expect a major increase in remote working staff post-Covid-19. The median firm expects that 51% of employees will work remotely at least one day per week, compared to just 23% of employees prior to the pandemic.

Approximately 60% of AEC companies consequently expect to downsize their office footprint post-Covid, with the median firm projecting a footprint reduction of 10%.

Sector growth is expected to be slow, with weighted revenue growth projected at 1.1% in 2020 and 2.8% on 2021. AEC Advisors noted that large firms are growing more slowly, which is consistent with the last several years.

In line with a previous AEC Advisors survey from mid-April which measured project delays across markets, the private sector buildings and energy markets are also seeing large declines in project pursuits. Federal government, water, and emergency response markets are seeing the largest uptick in projects.

However, the report said that state and municipal clients are reducing projects, likely as a result of financing issues as municipal budgets are hammered by Covid-19. This means that the water and wastewater markets could see significant headwinds in the future.