If you think of the pandemic as a rollercoaster, then the 2022 business trend data for the Interior Design Rising Giants, the second 100 largest firms, would be a popular one. Like any good coaster, the initial drop was a doozy, with total fees heading down from $521 million in 2019 to $314 million in 2020 as COVID-19 hit the economy. Now, however, it looks like the rollercoaster has troughed and is heading up the next ramp. Total fees for 2021 came in at $354 million, a healthy 13 percent bump. And the Rising Giants forecast the coming year at $416 million, continuing the upward surge.
What’s more notable than the forecast itself is the Rising Giants’s certainty in it. Just over half of the firms surveyed are “confident” in next year’s numbers, and three out of 10 are “very confident.” As far as those coming in as “not confident,” well, that number dropped from 31 percent to 14.
Let’s dig a little deeper into the 2021 results to see how much confidence is warranted. Hospitality remains the largest business sector for the Rising Giants, accounting for 34 percent of total fees ($121 million—about even with 2020). Corporate office work rose 26 percent to $88 million and accounts for a quarter of all work in this group. Residential is the third largest moneymaker and was up 22 percent from 2020 to $60 million. Healthcare now accounts for 10 percent of all fees and rose 19 percent to $36 million.
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Project Categories and Locations
Again, the forecasts for business sectors are all positive, particularly retail (expected to grow 39 percent in 2022), hospitality (23 percent), residential (19 percent) as well as healthcare and corporate (15 percent each). Furniture and fixtures along with construction products also showed robust recovery, rising from 2020’s $10.2 billion to $15.7 billion. That’s not quite 2019’s $18.5 billion, but these Giants are forecasting $17.1 billion for 2022, so momentum is gaining.
Work volume metrics are up, too. Total square footage rose by 10 million, or 6 percent, to 180 million. The 2022 forecast is just over 200 million. As for cost per square foot, the rollercoaster rolls again with $109/foot in 2019, down to $77, and now back up to $118. Total number of jobs has also spiked: 12,039 in 2020 to 15,187, with a forecast of 16,653 in 2022.
The retreat from work outside the U.S.—as seen in our other Giants groups, as well—continues here. In 2019, 16 percent of the Rising Giants did international work. Now that number is just 7 percent. For those who do this work, Canada and Asia/Pacific Rim saw steep declines in the number of firms working there, while the Caribbean warmed up. As a result, it’s no real surprise that these Giants see the most growth potential in the U.S. Southwest, Southeast, and Northwest. Only two firms said they planned on closing an office in 2022, yet a noteworthy 10 percent plan to expand.
Firms with Most Fee Growth
|2||J. Banks Design Group||2,555,362||5,602,531|
|8||Arris, a Design Studio||4,600,000||5,600,000|
Design staff numbers are the only ones not currently rising, and in fact have declined from 2,739 in 2019 to 2,593. Billing rates have remained steady ($130 an hour), while fees per employee have deflated, down 29 percent since 2019—$200,000 to $143,000 in real numbers. Staff salaries, however, have crept up, with designers going from $70,000 per year to $75,000. Project managers remained unchanged at $105,000 a per year, while principles/partners saw their comp jump from $155,000 pear year to $187,000.
Fees by Project Type
Project Numbers by Type
As far as the main challenges affecting business, the refrains are pretty much what you hear from businesses everywhere: Recruiting and retaining qualified staff. Design firms will always be concerned, too, with earning appropriate fees and dealing with demanding clients. But here’s one telling data point in the “business challenges” survey: Last year 87 percent of firms were worried about the uncertain economy; this year it’s only 55 percent.
And maybe that’s the watchword right now: optimism. The 2022 forecasts—and the Rising Giants’s growing confidence in their business prospects—show that while, sure, we may not be able to shake off this pandemic once and for all at the moment, firms are still doing great and in-demand work while we figure out all that other stuff.
The second installment of the two-part annual business survey of Interior Design Giants comprises the second largest firms ranked by interior design fees for the 12-month period ending December 31, 2021. The first 100 Giants firm ranking was published in February. 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, the research division of Sandow Design Group.