MELBOURNE MARKET UPDATE - AUGUST 2009

Activity levels for the period through to July / August of 2009 has shown continued strong activity with new positions being created at consistent levels from one month to the next. This is the most promising news we have brought since October of last year.

From an employment perspective, whilst we still cannot report full (ie: 100%) employment levels, we are now entering a market where increasingly, specific roles are becoming hard to fill based on lack of available personnel with the required skills.

Without getting too excited at this point, we still believe that close to 70% of newly created projects are a result of Federal and State finance, and in this respect see the heightened market activity to be artificial to a degree.
 
Any calls for the Federal Government's stimulus package to be wound back from its intended levels should not be heeded, as it would prove to have negative and rapidly experienced ill effect on the Architecture profession within the next 12 months.

Outside of the Government funding however, increasingly we are seeing positions created from the private sector, which is the litmus test we have been waiting for. This signifies a slight change in stance from the lending institutions compared to earlier in the year when it was apparent that property (with the exception of owner occupied residential) was viewed as a risk from these groups.

With this slight change, there is still no particular sector that we can say has greater strength than others, although the medium density residential sector feels to have the strongest prospects at this early stage. Whilst there are several larger scale ($200M) developments in early design stages, we are still some way from having confidence that this scale or above will be a major part of the market mix for some time. Once again the few truly large-scale projects anticipated in the next 6 months will be institutional and most likely PPP in nature. As a result of this, we still anticipate the 'two tiered' marketplace to remain, creating possible further concerns for some of the larger commercial practices that do not have strong exposure to the institutional projects sector.

Whilst we have seen some opportunities in the Interior Design sectors, this field remains relatively quiet, and this industry has seen very little positive impact from the Federal Governments stimulus program so far.

With the high proportion of Government projects currently in different stages, the main turbulence ahead from an employment perspective is how the different project streams will phase in and out, and what effect that will have on staffing requirements. As an example, as the Stage One education programs start to shed some staff, will the other streams be at a stage to absorb that particular type of personnel? Most likely so, however what is most important is that activity levels maintain their existing momentum across the market as a whole, and if this occurs, we should stay in an employment marketplace that offers opportunities for the majority of job seekers at any given time.

So where are the hotspots to look out for?

This time around, the best employment opportunities have not come as a result specifically of increased work per se.

We believe that many practices have seen the quieter market in late 2008 / early 2009 as an opportunity to take strategic steps within their businesses, and it is from this that we are seeing the best opportunities in a long-term sense.

The first of these comes from a groundswell of practices now using BIM software for projects across all stages, who may previously only have used BIM software for certain projects or stages, therefore opportunities for those with Revit, ArchiCAD and other 3D software skills are the strongest trend we have seen for some time.

Whilst AutoCAD demand still exists and will continue to do so, the message for those who have not yet embarked on developing BIM skills is to do so – sooner rather than later.

Several clients have made the comment that coming out of the recession of the early 1990's saw the almost full uptake on CAD, this time it is the movement towards BIM software that is the largest change to emerge from this downturn. (Please refer to Bilal Succar of Change Agents AEC commentary further in this newsletter).

The second of the Strategic areas that many offices have focused on is the sourcing of key Design based personnel. We are currently working with many groups who have isolated this specific area as part of their overall growth strategy. The positions that we refer to here range from talented Architects at 5 years experience who possess strong freehand and 3D software (including BIM software), through to highest level Directorship opportunities for Design Principals with strong industry reputations. Whilst it may be said that these types of individuals are always in demand, irrespective of market circumstances, it is now more than ever a topic of strategic discussion from many practices.

Experienced health professionals at Health Planner, Project Architect and Technician levels are also highly in demand.

In regards to Rates and Salaries over the past 4 months, we have seen some movement forward in percentage terms, however the majority of groups recruiting fall into the smaller to mid scale in terms of size generally, and subsequently remuneration has remained in the mid range of figures achieved during the middle point of 2008.

Where to from here?

Over the next 6 months, we anticipate similar market conditions to prevail that we have seen in the past 3 months in broad terms. This will rely partly on the confidence of the financial markets, (so keep an eye on markets in the September / October months), and as already mentioned, some turbulence for those engaged on Government projects that will start to slowly phase out between now and Christmas, although different streams of work across the industry should create other opportunities for those affected. Based on this we expect some 'musical chairs' in this area but without too much grief in terms of the bigger picture. Also due to the smaller scale of many projects currently underway, the momentum may not be as strong for some practices into the Christmas slowdown. Therefore the 'two tiered' market that we have been describing since February will still continue to exist, indicating that some firms will feel that things have never been better, with others remaining uncertain of prospects.

As one client described recently, 'It means that the industry is operating at near capacity, rather than over capacity, as previously [making it difficult, rather than impossible, to find the right people]'.

Thanks for taking the time to read this, and should you have any comments or feedback, please feel free to email brw@bloomfieldtremayne.com.au.