AVEC Market Pulse: Economic Trends
What’s Shaping Architecture and Landscape Architecture Firms Coast to Coast
May 2026 - Insights from the AVEC community and ASLA’s SKILL | ED Pulse Check: Building Resilience to Market Volatility
Across the architecture and landscape architecture industries, uncertainty has become less of a temporary condition and more of a persistent operating environment.
At AVEC, we spend every day in conversation with firm leaders across the country—from boutique residential studios and regional landscape architecture firms to larger multidisciplinary practices navigating increasingly complex markets. Over the past several months, those conversations have revealed a striking reality: the market is not moving in one direction. It is fragmented, regionalized, and highly uneven.
Some firms are seeing projects return after long pauses. Others are facing slowdowns in sectors that had felt unstoppable only two years ago. Public-sector funding remains active in some regions while bottlenecks and administrative delays stall projects elsewhere. Residential markets continue to perform in some geographies while multifamily and institutional work remain soft in others.
What firms are experiencing right now is not a traditional downturn with clear signals and predictable timing. Instead, it is a market defined by hesitation, unevenness, and unpredictability.
As AVEC Partner Rena Klein, FAIA, observed during a recent economic roundtable discussion with firm leaders, the traditional construction business cycle no longer behaves as predictably as it once did.
“The business cycle in the 20th century was a little bit more predictable. Especially since COVID, everything’s been really jumbled and regionalized.”
That sentiment surfaced repeatedly in two recent industry conversations hosted by AVEC and ASLA SKILL | ED. The details varied by region and project type, but the themes were remarkably consistent.
The Market Isn’t Uniformly Down—It’s Uneven
One of the clearest takeaways from both discussions was that many firms are not experiencing a complete lack of opportunity. Instead, they are navigating uneven demand.
A New England architecture firm with 14 employees described closing out its strongest year ever while simultaneously facing a steep backlog cliff in the months ahead. At the same time, they reported an unusually high volume of early-stage feasibility studies and conceptual inquiries.
A Houston-based architecture firm with 26 employees noted that public-sector work has become a stabilizing force while private-sector developers remain cautious because of interest rates and construction costs.
In the Rocky Mountain West, one architecture firm with 16 employees focused heavily on custom residential work explained that clients sensitive to financing costs largely paused projects late last year, while wealthier clients largely continued moving forward.
Several firms also described projects that appeared “dead,” suddenly coming back to life after months—or even years—of inactivity.
This pattern is creating a difficult operating environment for leadership teams because traditional indicators no longer tell the full story. A healthy proposal pipeline may not convert quickly into contracted work. A strong backlog may not translate into near-term cash flow. Firms can simultaneously feel busy and financially uncertain.
As AVEC Partner Valerie Puchades, FSMPS, CPSM, noted during the discussion, architecture billings nationally have remained below growth thresholds for much of the past year, yet opportunities still exist. Bonus: View Valerie’s Q1 2026 Economic Report.
The challenge is that pursuing those opportunities now often requires a different strategy than it did during the post-pandemic boom.
Expand the key trends listed below to get a window into our observations:
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For firms working in infrastructure, civic, or publicly funded sectors, another theme emerged clearly: many leaders are concerned about what happens as federal infrastructure and Inflation Reduction Act funding begins to taper.
A Mid-Atlantic landscape architecture firm with 16 people focused on public infrastructure work noted that many firms are preparing for a potential “funding cliff” as current federal programs wind down.
At the same time, several public-sector firms reported that agencies continue to struggle with staffing, approvals, and administrative throughput. In some cases, projects technically have funding but are moving slowly because the systems required to administer them remain overwhelmed.
This distinction matters.
The issue is not always that work has disappeared. Often, it is that projects are delayed, invoices move slowly, approvals stall, or clients hesitate to commit until they have more certainty around future funding.
In response, some firms are becoming far more sophisticated in how they track government budgets and funding sources.
One firm described shifting its business development efforts toward municipalities and agencies with stronger locally funded capital plans rather than relying heavily on federally dependent work.
That type of strategic repositioning reflects a broader shift happening across the industry: firms are becoming more proactive and analytical about where opportunity is most likely to remain stable.
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If there was one operational challenge that surfaced repeatedly across both conversations, it was cash flow.
Even firms with healthy workloads described increasing pressure caused by delayed payments, consultant payment structures, prolonged permitting timelines, and slower project starts.
Several leaders emphasized a lesson many firms are relearning in real time:
Backlog and financial health are not the same thing.
A firm may appear busy on paper while still facing strain if invoices are delayed or if projects are structured in ways that slow payment cycles.
This dynamic has become especially difficult for subconsultants and firms working through multiple layers of project teams.
In uncertain markets, understanding the financial mechanics of projects matters more than ever:
How quickly does this client typically pay?
Is the project dependent on reimbursements or grant funding?
Who approves invoices?
How long does permitting realistically take?
Are firms carrying uncompensated administrative burden?
Several firms discussed shifting portions of their services—particularly permitting, approvals, and construction administration—to hourly structures rather than fixed-fee arrangements.
One Pacific Northwest architecture firm described excluding permitting from percentage-based fees entirely because entitlement and review processes have become too unpredictable to price reliably.
Another New England firm shared that charging hourly for approvals, stakeholder coordination, and construction administration has helped align expectations more effectively with clients.
The broader takeaway is that operational discipline matters enormously during uncertain periods. Firms that understand how projects actually move financially are better positioned to protect stability.
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Periods of volatility often force firms to revisit a fundamental strategic question:
What kinds of work actually support our business model?
Over the past several years, many firms diversified rapidly in response to market demand. But today’s environment is forcing leaders to evaluate whether all revenue is equally valuable.
Some projects create backlog but strain staffing. Some sectors remain active but produce lower profitability or slower payment cycles. Other opportunities may require expertise, staffing structures, or operational systems that do not align with the firm’s strengths.
Several firms described becoming more selective about the projects they pursue.
One Pacific Northwest firm shared that they stepped away from certain state on-call contracts because fee structures no longer supported sustainable profitability.
Others discussed becoming more intentional about diversification—expanding into adjacent sectors carefully rather than chasing unfamiliar work simply to keep teams busy.
That distinction is critical.
In uncertain environments, reactive diversification can create hidden operational risk. Firms that move into unfamiliar sectors too quickly may encounter new compliance demands, pricing assumptions that do not hold up, or staffing burdens they did not anticipate.
The firms navigating uncertainty most effectively appear to be the ones balancing flexibility with strategic discipline.
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Another recurring theme was increased competition.
As project volume softens in some regions and sectors, firms are seeing more teams pursue the same opportunities.
Several leaders noted larger proposal pools, increased out-of-region competition, and growing pressure on fees.
But interestingly, many firms also expressed reluctance to participate in a “race to the bottom” on pricing.
Instead, the conversation repeatedly returned to value, positioning, and client education.
One landscape architecture leader described the challenge directly: as firms raise compensation to remain competitive in hiring, they are simultaneously struggling to raise billing rates quickly enough to maintain profitability.
Another firm questioned whether discounting fees ultimately harms the industry as a whole.
The consensus from the discussion was clear: lowering fees simply to secure work is risky.
As AVEC’s Rena Klein, FAIA, noted:
“There’s financial risk in taking projects where you’ve discounted your fee just to get the work. It’s a dangerous game because the work lasts for a long time.”
Instead, firms discussed the importance of helping clients better understand the value architects and landscape architects bring—not simply as service providers, but as strategic partners capable of reducing risk, improving outcomes, and helping projects succeed.
Several firms described increasingly using education as part of their business development process, especially with less experienced clients who may not fully understand the role of design professionals.
Relationships, trust, and communication continue to matter enormously.
One firm shared a story of losing a fee comparison battle on paper to a much cheaper competitor—only to ultimately win the project because of the strength of the client relationship.
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Perhaps one of the strongest themes across both discussions was the importance of sustained business development.
In busy periods, many firms naturally deprioritize relationship-building as principals become consumed by project delivery. But uncertain markets expose the weakness in that cycle.
Several firms described intentionally increasing outreach efforts even while navigating operational stress.
That has included:
Reconnecting with former clients
Increasing visibility in professional organizations
Offering feasibility studies and early-stage advisory services
Revisiting sectors they had not pursued in years
Updating websites and marketing materials
Expanding conversations with local governments and funding agencies
Exploring renovation, retrofit, and adaptive reuse opportunities
One Montana architecture firm with six employees shared that repositioning and marketing renovation and energy retrofit expertise generated meaningful new interest from homeowners and hospitality clients focused on operational efficiency.
That shift reflects a broader industry reality: firms that continue nurturing relationships during uncertain periods are often better positioned when stalled work returns.
As AVEC leaders emphasized throughout the discussions, business development is not something firms can afford to treat as seasonal.
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Staffing uncertainty continues to weigh heavily on firm leaders.
Several firms described moving rapidly from aggressive hiring during the boom years of 2021–2023 into periods of contraction, restructuring, or stabilization.
Others noted that while hiring has become somewhat easier because more candidates are available, compensation pressures remain intense.
One landscape architecture firm noted that candidate pools have expanded significantly compared to the past several years, giving firms more options and stronger comparisons between applicants.
At the same time, firms continue struggling to align salary expectations, billing rates, and profitability.
The conversations also highlighted the emotional and operational complexity of staffing decisions.
Some firms discussed using slower periods to focus on internal improvements, systems, standards, and strategic initiatives rather than immediately reducing staff.
Others acknowledged that firms sometimes wait too long to make difficult staffing decisions because leaders genuinely want to protect their teams.
The firms handling these moments most effectively appear to share a commitment to transparency and communication.
Rather than pretending uncertainty does not exist, leaders are increasingly recognizing the importance of keeping staff informed, explaining strategic decisions clearly, and reinforcing that leadership is sharing in the burden of difficult periods.
The Industry Is Learning to Operate Without Clear Signals
What makes this moment especially challenging is that it does not resemble a traditional recession.
There has not been a single dramatic shock that clearly reset the market overnight. Instead, firms are navigating prolonged ambiguity.
Projects stall and restart. Clients hesitate and then suddenly move forward. Certain sectors cool while others unexpectedly strengthen. Regional conditions vary dramatically.
As one AVEC discussion participant observed, many firms feel as though they are perpetually “three months away from the cliff”—yet the cliff keeps moving.
That uncertainty changes the nature of leadership.
Today, success is less about perfectly predicting the market and more about building organizations capable of responding quickly, communicating clearly, and operating strategically without complete certainty.
The firms weathering this environment most effectively are not necessarily the ones with the biggest backlogs. They are often the firms that:
Understand their financial realities clearly
Stay close to clients and funding structures
Maintain disciplined business development habits
Protect profitability intentionally
Diversify thoughtfully rather than reactively
Communicate honestly with their teams
Adapt operationally before crisis forces the issue
At AVEC, we believe resilience is not accidental. It comes from leadership discipline, strategic clarity, and a willingness to make thoughtful decisions before certainty arrives.
The market may remain uneven for some time. But uncertainty does not eliminate opportunity. Firms that stay intentional, relationship-driven, and operationally disciplined will be best positioned not only to weather volatility but to emerge stronger because of it.