Revenue Remains on an Upward Track for MidAtlantic Firms
Steadily improving market conditions, plus some acquisitions, are producing higher revenue numbers for many large design firms throughout the mid-Atlantic region. Data from the ENR MidAtlantic 2015 Top Design Firm survey shows that total 2014 revenue for the top 20 firms on this year's list climbed 22%, to $2.76 billion, from $2.26 billion in 2013.
This year's survey results include firms' 2014 revenue earned in Delaware, Maryland, Pennsylvania, Virginia, West Virginia and the District of Columbia.
Dealmaking Activity
Acquisitions were a major factor in some firms' large bump in revenue. For example, AECOM, which acquired URS Corp. last year, saw a significant rise. In 2013, before the URS deal, AECOM recorded $290.8 million in mid-Atlantic revenue. With the addition of URS, AECOM's 2014 regional revenue more than doubled, to $616.5 million.
Arcadis also saw improved revenue, thanks in large part to acquisitions. The firm acquired Baltimore-based RTKL in 2007 and started including RTKL revenue in its regional reporting in 2014. As a result, Arcadis revenue jumped 13% last year, to $114.6 million, from $101.8 million in 2013. Arcadis also acquired Seattle-based Callison in 2014, but that firm has a limited presence in the mid-Atlantic states.
Now several years since the recession hit, business continues to improve for most firms. Seven of the top 10 firms that responded to the survey in the last two years saw regional revenue increase in 2014.
Despite uncertainty about long-term federal transportation funding, many firms that work in that sector reported growth in 2014. Seven of the top 10 firms on this year's list said that they brought in more revenue from transportation than any other sector. All but one firm—Arcadis—listed transportation as one of their top two sectors in terms of revenue.
Joe Makar, managing partner at Whitman, Requardt & Associates, Baltimore, says that, although the future of federal aid is an ongoing concern for firms, the market is "reasonably solid" with "steady opportunities for growth." Last year, WRA's revenue increased 4%, to $109.9 million, with 51% of that revenue generated in the transportation sector.
Some firms benefited from transportation megaprojects. Dewberry's revenue rose to $136.1 million last year from $120.8 million in 2013. Kurt Thompson, executive vice president, says one important reason for the gain was the firm's work on the $1.2-billion Phase 2 of Metro's Silver Line project, underway near Dulles International Airport.
Impact of Oil
The oil and gas market, particularly work related to natural gas activity in the Marcellus Shale region, helped some firms in 2014. Civil & Environmental Consultants, Cardno, Hatch Mott MacDonald and Dawood Engineering each reported more revenue from the petroleum sector than any other line of business. But the impact of lower energy prices on design firms' results in 2015 and beyond remains to be seen.
Several other firms banked on oil and gas opportunities last year. STV reported revenue was up 21%, to $111.4 million, from $92.3 million in 2013, which the firm credited to "an uptick in the volume of work relating to infrastructure to support the fuel transportation market."
Some general building firms also experienced an uptick in 2014. Gensler reported $79.6 million in general building revenue in 2014, up from $70.8 million in the previous year.
SmithGroupJJR reported the largest improvement among its peers in general building. Its revenue nearly doubled, to $54.5 million in 2014, from $27.5 million in 2013. The firm is on the design team for the $870-million MGM National Harbor casino project underway in Prince George's County, Md., outside Washington, D.C.
General building firm Ayers Saint Gross also rose through the ranks this year to No. 30, from 43rd in last year's ranking, thanks to a nearly 50% increase in revenue. The firm's George Washington University District House project in Washington, D.C., was its largest to break ground last year.
Parson Brinckerhoff, which was acquired by Canadian-firm WSP last year, reported an $11.4-million mid-Atlantic revenue increase. Although transportation remains PB's largest sector, $8.7 million of its 2014 revenue increase came from general building.
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