Architects’ profit margins rise in ‘21
Architectural services enjoyed a successful year in 2021, Statistics Canada reports.
The national agency released the findings of its analysis into the combined total operating revenue of the architectural services and landscape architectural services industries last month. Revenues increased by 15.7% to $6.3 billion – the strongest growth in nearly a decade.
When total operating expenses of $5.1 billion are factored into the equation, profit margins increased from 17.7% in 2020 to 18.8% in 2021.
Driving demand was the country’s hot housing market. Residential starts increased from 217,880 units in 2020 to 271,198 units in 2021, with increases for both single-detached and multiple-unit types. Additionally, households undertook more renovation projects, spurring demand for building materials and professional services.
Investment in public infrastructure also remained elevated.
In terms of the breakdown of sales within these industries, 49% came from architectural services for non-residential building projects, such as office buildings, educational institutions, health care institutions, and retail stores and restaurants.
Residential building projects accounted for 21.8% of sales, while the remaining 29.2% was generated by landscape architectural services, urban planning and other related services.
Geographically, companies in Ontario generated 44.0% of total operating revenue in 2021. Quebec represented 20.8% of total operating revenue, while British Columbia was the third-largest contributor, at 18.7%. The majority of total sales in Canada (83.5%) occurred in these three provinces.
Industry sales to businesses represented 53.6% of total sales, followed by sales to governments, non-profit organizations and public institutions (30.9%); individuals and households (12.0%); and customers outside Canada (3.6%).
Statistics Canada forecasts that demand for architectural services will remain strong in 2022 – even despite easing housing starts and elevated interest rates.
The contraction in residential investment was moderate, as solid population growth spurred by net international migration still encouraged residential developments in nearly all provinces.
Non-residential investment did not slow down, continuing its recovery in the first three quarters of 2022. Public investment in infrastructure also did not contract over the same period.