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Southwest Design Firms Expect Steady Rebound to Continue

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The results are in for ENR Southwest's design firm survey, and according to both the collected data and industry executives, a slow, steady recovery continues to unfold in the marketplace.

Image courtesy of MWH Global
Reclaiming Work Tucson's Tres Rios Water Reclamation facility is part of a $632-million master plan under way in Pima County.
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"I'm seeing cautious optimism and steady momentum, although there is some concern about the slowdown in new and used home sales," says Doug Plasencia, vice president of Michael Baker Corp.'s Phoenix office. "However, we're still seeing a continuous stream of design-build opportunities coming from the federal sector."

Overall, the 75 firms that participated in the survey had a combined $799 million in total revenue for the 2013 calendar year, up nearly $18 million compared with the previous year—although only 63 firms participated in the year-ago survey.

Residential Construction Surge

The residential market is anticipated to drive much of the growth as 2014 progresses, according to Plasencia, even though sales have slowed.

"In the next year, we're anticipating some acceleration in the residential market with more single-family subdivisions and some limited multifamily activity as a result of the improving job market. The people who opted to walk away from underwater mortgages are becoming buyers, once again, thanks to the forgiveness of lenders," he says.

In the Southwest, water projects are always a driving force that municipalities must undertake, especially with residential construction on the rise. As resources become more hotly contested, new systems provide more supply, says Kevin Kammerzell, vice president of MWH Global's Tempe, Ariz., office.

"Municipal clients in the arid Southwest have always focused on responsible use of water, but have more recently increased intelligent management of wastewater effluent for aquifer recharge or restoration of valuable environmental habitats," he says.

Recharge and the use of treated effluent is also increasing for water intensive industries such as mining, a historical economic linchpin of the Southwest.

"Mining operations require a significant volume of water to process the ore materials and suppress dust emissions from their facilities," Kammerzell says. "These clients are pursuing ways to recycle process solutions but often need to pursue new water resources to support expanding activities."

Downturn Shadow Remains

But even optimism over water projects can't erase the memory that the combined revenue of all 75 firms in this year's survey is less than the $800 million that the top 10 firms alone posted in 2008.

"Everybody is still a little shell-shocked," says Phil Weddle, co-founder of Weddle Gilmore Black Rock Studio, Scottsdale, Ariz. "Everyone is still referencing where we've been. It still feels a little different."

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