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Introducing Interior Design’s 2024 Rising Giants

The 2024 Rising Giants report from Interior Design highlights the performance and trends of the second tier of design firms, differentiating them from the top 100 firms. While both groups have recovered from the pandemic, Rising Giants experienced a more significant impact during COVID-19, necessitating a longer recovery period. Their design fees, at $576 million, are less than a tenth of the top 100 firms' $5.9 billion, meaning smaller changes in their financial metrics can lead to larger percentage swings. This volatility can also be influenced by the performance of a single large project or market. Despite the deeper impact of the pandemic, Rising Giants had a strong 2023. Design fees grew 11% since 2019 and 8% year-over-year. The value of furniture, fixtures, and equipment (FF&C) installed increased by 15% over the same period. The number of projects undertaken by these firms rose by 9% from 2022 to 2023, and more than doubled since 2019, reaching a total of 24,956 projects. This contrasts with the top 100 Giants, whose projects increased by only 13% in the same interval. Staffing trends also show a divergence. While the top 100 firms saw a 16% reduction in employees, Rising Giants experienced an equal percentage of staff growth, indicating a robust rebuilding phase after pandemic-related downsizing. The number of principals/partners increased by 109% since 2019, project managers by 61%, and designers by 36%. These figures account for both new hires and internal promotions. Financially, salaries for Rising Giants employees increased by 11%, but billable rates only rose by 2%. This suggests that these firms are undertaking more projects and paying their staff more, yet they are not significantly increasing their billable fees, possibly due to the competitive landscape for securing work. Forecasts for 2024 also reveal different outlooks. Last year, the top 100 firms predicted a decline that did not materialize, while Rising Giants anticipated an uptick, which occurred even more strongly than expected. For 2024, Rising Giants project a less significant slowdown compared to the top 100, reflecting their more optimistic recovery trajectory. The report identifies key challenges faced by Rising Giants. Client-related issues include a lack of understanding of design value (58%), client unwillingness to pay appropriate fees (56%), and challenges in explaining timelines (44%). Business issues highlight concerns about an uncertain economy (68%), earning appropriate fees (64%), and increasing client demands (51%). Practice issues predominantly revolve around recruiting qualified staff (74%), creating new business/diversifying segments (51%), and staff training (37%). Regarding project types, 49% of Rising Giants' work involves new construction, 44% is renovation/retrofit, and 7% is cosmetic refresh only. The majority of projects (88%) are domestic, with 12% being international. International projects are primarily located in Canada (40%), Asia/Pacific Rim (38%), and the Caribbean (28%). The average billable time for Rising Giants is 80%, with 44% of firms reporting 80-89% billable time. The methodology for the annual business survey includes North American firms generating at least 25% of their interior design fee income in North America. Fees encompass all aspects of interior design practice, including strategic planning, programming, design, and project management, and are based on work performed by full-time staff or equivalents. The research for this report was conducted by ThinkLab, the research division of SANDOW Design Group. #RisingGiants #InteriorDesign #IndustryTrends #BusinessPerformance #StaffingGrowth #FinancialAnalysis #ProjectManagement #MarketForecast #RisingGiants #InteriorDesign #IndustryTrends #BusinessPerformance #StaffingGrowth #FinancialAnalysis #ProjectManagement #MarketForecast
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