Activity levels in the January to March period have at last shown some signs of life, and indeed our normal  “litmus test” period of mid February to mid March has been more positive when compared to the uncertainty that prevailed late last year. We are currently anticipating that there will be a “two tiered” marketplace showing clear divisions between groups with institutional project exposure, and those without.

Essentially there is a shifting of the project types and scales (downwards but more of them) that were existent up until October 2008. The major negative factor impacting the market being the ‘risk averse stance” currently being held by lending institutions towards medium to large-scale property. In broader terms this means that mixed use or commercial buildings of $100M scale and above are unlikely to move within the foreseeable future. Whilst there are several exceptions to this, they are exceptions rather than a market trend.

Project flow from the Federal Government’s Stimulus Package now seems to be on everyone’s radar. Whilst this is welcomed, given the limitations in the commercial marketplace, it will not be a magic fix across the entire industry. Specific sectors within the Institutional project areas will continue to improve, meaning practices with existing track records in these areas will primarily benefit with some additional overflow into more broadly based groups.

Otherwise, project flow is still occurring in most sectors, without one specific area being noticeably strong. This has been evidenced with projects as varied as mid-rise apartments, small-scale commercial, residential, retail and hotel interiors all creating job placements in the course of the past month. Interior Design opportunities are still relatively limited. The Corporate Interiors market appears in a holding pattern, being linked most closely to broader uncertainty in the business community.

Whilst redundancies have occurred over the past 3 months, a good percentage of those affected have been able to find alternative roles in the industry. We have seen an increase in “strategic” positions made available. These range across “executive” roles in highly focused areas such as health planning, marketing – business development, Architects and Draftspeople with extensive and specific CAD (rarer types of and very new systems) exposure and even recent graduates with high quality design and presentation skills that can offer greater flexibility to a practice in early project stages.

In keeping with the “two tiered” marketplace described above, we are already seeing potential shortages of those with very specific project experience. This runs contrary to the belief that there is an oversupply of personnel across all project sectors. A key example of this is the willingness of some practices in the Health sector to still sponsor people from offshore if they have extensive Health experience.

Outside of the Institutional sectors, we anticipate a trend towards contract based, project specific positions over permanent roles in the next 6 months, thus enabling flexibility to practices with project specific and short term needs. Given there is an increase in immediately available personnel, these requirements are often more readily satisfied than in previous years.

We have seen Salary and contract rates leveling off from the highs achieved in July to October last year, and with smaller to mid sized practices more likely to recruit than very large groups, a softening has occurred.  This reduction in contract rates moreso and salaries has been between –3 and –10 % from the levels seen in the first half of last year. We feel this negative adjustment is more related to the size of practice employing rather than a large demand vs supply movement. Additionally there has been greater flexibility from applicants in regards to remuneration given the climate.

There has been a weakening in many offshore markets over the past 3 months, most notably Dubai, and the continued difficulty within UK and American markets. We have seen a return of high calibre, well experienced Australian Architects, technicians and Interior Designers returning to Australia. This once again presents an ideal opportunity to those groups looking to recruit to find personnel of an extremely high caliber.

In summary, we anticipate mixed fortunes for practices dependent on their specialised project sectors over the next 6 months. However there will be opportunities with projects still coming available. Government fiscal stimulus will be important to underpin this, and private sector development will be dictated by available finance, (specifically the “risk” stance of lenders) with only average expectations in the medium term anticipated. Rare opportunities exist for practices in a position to recruit, given the availability and calibre of available personnel or for those seeking to “upgrade” the quality of staff.

We are yet to find ourselves in a “depression”. Thus far the impact of current market conditions have come on quicker than originally expected but does not seem as deep as originally thought based on initial indicators. The rhetoric from economic leaders suggests there is more pain to come. We believe the reality at present is that Melbourne, as a marketplace, is still a good place to be when compared to London, USA and Europe.