This is the second article in a four-part series offering strategies for future-proofing your architectural practice.
Market volatility is inevitable in the building industry. It can be a mere blip, like when new state healthcare regulations dampen demand for healthcare facilities for a year or two. Or, as every architect knows, it can also be devastating, like when the entire housing market collapses and pulls the economy into a multiyear recession.
Diversify, Diversify, Diversify
Avoiding industrywide catastrophes is difficult, but firms can protect themselves against the inevitable ups and downs through diversification. Though common sense suggests looking for counter-cyclical markets—one that’s up when another is down—truly counter-cyclical markets are nearly impossible to find. Instead, architecture firms should be pursuing work in four to five sectors that are affected by different economic forces. Government bonds, for instance, may fuel demand for libraries and civic buildings one year, while changing demographics may drive up the need for senior housing five years from now.