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08 Forecast: LASN Survey Reveals Over Half of Landscape Architect Firms Expect '08 to Be Stronger than '07!




Photography by Sam Brown, courtesy of American Society of Landscape Architects.
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First of all, the encouraging economic news. LASN's survey of landscape architect firms found 43.8 percent of the firms reported revenue increases of at least 10 percent in 2007, and 8.3 percent saw increases above 35 percent. Good numbers! And more importantly, 52.1 percent of the firms surveyed anticipate 2008 will be a stronger year; another 32 percent expect a similar year. (Look in this article for for more survey numbers.)






Lurie Garden, Chicago, designed by Gustafson Guthrie Nichol Ltd. Photography by Sam Brown, courtesy of American Society of Landscape Architects.


LASN also surveyed the working partners of landscape architects--landscape contracting companies. Fifty-six percent of the contractors saw their revenues grow in 2007, and half expect more growth in '08. And while 36 percent of contractors reported cutting positions, close to half expect to hire more workers in 2008.






Morbras Meeting Point in Roissy-en-Brie, France, designed by Kathryn Gustafson. Photography by Sam Brown, courtesy of American Society of Landscape Architects.


This input from the landscape architecture firms is good news. While the Dow 30 Industrials index value has undulated significantly since the U.S. subprime mortgage mess hit the financial markets beginning on Thursday Aug. 9, 2007, as we go to press the Dow has climbed to 13,367. That is also encouraging, considering that on Aug. 9 the BNP (Banque Nationale de Paris) Paribas, une grosse banque, as the French say (a big bank) froze three funds invested in U.S. subprime mortgages and the mortgage default debacle was on. Overnight, European banks didn't want to lend to one another on the usual terms. Stock markets on both sides of the Atlantic tumbled. The Dow plunged 387.18 points, or 2.8 percent, its largest one-day loss since February 27, 2007, when the Dow fell -416 points (-3.29 percent), the seventh greatest point loss in DJIA history. (By comparison the Crash of 1929 had three trading days that rank 3rd, 4th and 5th in the greatest DKIA percentage losses: Oct. 28 (-12.61 percent), Oct. 29 (-11.73%) and Nov. 6 (-9.92%).)

Pres. Bush basically said, "Don't worry." He explained his advisors told him there was enough liquidity in the market, i.e., enough money floating around. The Fed, and other central banks of major economies began pumping billions of dollars (liquidity) into the banking system to give investors confidence.

The Federal Reserve Intervenes

On Sept 18, the Federal Reserved cut U.S. federal funds interest rate (rate banks loan money to other banks) a half-percentage point to 4.75% to help the housing slump--the lowest rate since May 2006. That sparked a big rally on Sept. 19 on Wall Street. The Dow closed up 335.97 points (2.51%), the best daily percentage gain since 2003. Makes you wonder why they ever raise the rate, huh? It was the first rate cut since Ben Bernanke took over as chairman of the central bank in February 2006 year. Note: On Nov. 1, as we near press time, the Fed cut interest rates a quarter-point more. The next day the Dow dropped 362 points and oil ascended to another record high.






Alan Greenspan, the former chairman of the Federal Reserve, told Lesley Stahl in an interview airing Sept. 9 on "60 Minutes": "While I was aware a lot of these practices (subprime lending) were going on, I had no notion of how significant they had become until very late. I really didn't get it until very late in 2005 and 2006." It's disconcerting to hear our top economist didn't catch the significance of the subprime mess!


GDP and GNP Up!

While there has been talk of a coming recession in some quarters--Wall Street Journal economics editor David Wessel told NPR on Oct. 30 the combination of a troubled housing market, rising oil prices and credit problems stemming from the subprime lending crisis was likely to lead the economy to recession--the U.S. gross product numbers say just the opposite! Recession is defined by a decline in GDP for two or more consecutive quarters. According to preliminary estimates released by the Bureau of Economic Analysis on Nov. 29, 2007, the U.S. current-dollar gross domestic product (GDP)--the output of goods and services produced by labor and property--increased at an annual rate of 4.9 percent in the third quarter of 2007. In the second quarter, real GDP increased 3.8 percent.

The real U.S. gross national product (GNP)--the goods and services produced by the labor--increased 5.6 percent in the third quarter, compared with an increase of 4.0 percent in the second. Note: GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $20.6 billion in the third quarter after increasing $5.8 billion in the second; in the third quarter, receipts increased $29.1 billion, and payments increased $8.5 billion.



A crystal ball would be nice! $10,000 invested in Dell in 1990 would be worth $5.5 million today. Source: The Motley Fool



Residential Construction Numbers Down, but All Other Construction is Up!

The graphs throughout the forecast are based on the government's Sept. economic numbers. The Oct. numbers just arrived as we go to press, but those numbers show very small variances. The put-in-place construction numbers (year-to-date percentage change from Oct. 2006 compared to Oct. 2007) reveal total construction is -2.8%, largely the result of a 17.2% decline in total residential construction, but all the other numbers are up. Total commercial construction is up 13.6%; total office construction is up 20.4%; total lodging construction is up 65.3%; total health care construction is up 13.6%; and total educational construction is up 14.1%.

(See the "Market Segment Consensus Growth Forecasts" chart for more put-in-place construction numbers.)

Growth Rate

On Oct. 11, 2007, Bloomberg reported a new survey by the Washington, D.C.-based Business Council of Heads of Fortune 500 Companies. Fifty-two percent of the CEOs surveyed predicted a two percent growth or less in the U.S. in 2008; 48 percent expecting 2.1 to 3 percent growth, but none anticipate more than three percent. Those CEOs predict the U.S. economic growth will slump because of the increase in costs of credit.

"You can't help but be affected by all the news on credit conditions," said Jay Bryson, an economist at Wachovia Corp. in Charlotte, N.C. Wachovia is the fourth-largest bank in the U.S. and recently acquired World Savings. However, Wachovia's balance sheet showed its first drop in profits in six years, the result of rising bad debts among its mortgage customers.

Bloomberg also polls the man on the street. Sixty-five percent of the polloi believe a recession is likely.

International Monetary Fund

On Oct. 17, 2007, the International Monetary Fund (IMF) posted its forecast for global economic growth in 2008 to 4.8 percent, from 5.2 percent in July, citing a weaker outlook in the U.S. The IMF expects the U.S. gross domestic product to expand by 1.9 percent in 2008, rather than the 2.9 percent of the fund's previous prediction.

Simon Johnson, the IMF's chief economist, warned of "serious risks ahead." He told news conference attendees in Washington, D.C., "The smoke has not yet cleared."

Real Estate

On Oct. 24, the National Association of Realtors reported existing home sales sank eight percent in September, the lowest pace on record. On Sept. 19, 2007, NPR reported on the plummeting real estate market in and around Miami, speaking with realtor John Rosser of John Paul Rosser and Associates. He has made a living for decades selling land to condo developers. Mr. Rosser marveled that developers are still in the game here.

"It's saturated. I counted 75 construction cranes (the new state bird) in the sky before I lost count before I could finish," he said.

"There were buyers for thousands, now there's less than 400 buyers a year. We had 40 million worth of commercial deals buying land for developers a year ago March; within a month, almost all of those deals went away. People were walking away from $150,000 deposits. We'd never had people walk away from deposits."

What happened? Developers weren't getting the loans, but banks are still lending here. Rosser points to three new buildings going up, each with about $400 million loans.

He expects some of these buildings will go back to the banks. Rosser lives in affluent Key Biscayne. From the single-family home perspective, in July and Aug. there were zero home sell contracts on Key Biscayne. Homes like his were valued at $1.45 million two years ago; last year it was down to $1.25 million; this year around $1.08 million. He expects the prices will retreat to what they were five years ago, around $750K.

Rosser relates the story of an elderly lady client with three homes on a 20,000 sq. ft. lot zoned for high rises. She wanted to sell last year and he got her an offer of $2.5 million. She wanted $3 million. He told her it was an excellent deal, but she didn't take it. Now, he says, she couldn't get half that.

The Architectural Horizon

According to the American Institute of Architects (AIA), architecture firms employ roughly 190,000 people in the U.S. Of those employees, 35 percent (66,500) are licensed architects, but 15 percent of the architecture workforce (28,500) are other design professionals--engineers, landscape architects, interior designers, etc.

The AIA produces the Architecture Billings Index (ABI), an economic indicator of construction activity produced by the AIA Economics & Market Research Group. The monthly survey shows an approximate 9 to 12 month lag time between architecture billings and construction spending. In July 2007, the index reached 60, the second highest mark since the survey's inception in 1995 (any score above 50 indicates an increase in billings). Inquiries for new projects was 66.2. In August, however, the index dropped six points. In September the index dropped to its lowest level since June 2006, down to 51.1, with inquiries for new projects was 61.4.The index also reports regional averages. The Midwest region had the lowest score (49.5). The sector breakdown numbers were: mixed practice (55.0), commercial/industrial (54.9), institutional (49.0), multi-family residential (44.3).

"While there is plenty of nonresidential construction activity in the pipeline over the coming months, the demand for new projects is tapering off a bit." said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. "The fallout from the subprime mortgage meltdown in the residential market has seeped into the nonresidential sector causing project delays and a tightening market for financing. There is also emerging concern in the industry that this situation will extend into 2008."

  • AIA predicts strong nonresidential construction activity through 2007 and stabilizing in 2008
  • Hotels, healthcare facilities and schools to see the most growth

Commercial Sector--Moderate in 2008

On the commercial side, all major sectors are projected to see slower growth in 2008, while the institutional sectors will continue to experience moderate growth levels.

Spending on the construction of office buildings will climb over 11 percent this year before inflation adjustments, according to the Consensus Forecast Panel, before slowing to a 3.5 percent increase next year. The national office vacancy rate was at 12.8 percent at the end of the first quarter, according to reports from CB Richard Ellis, a global leader in real estate services. Though at a very favorable level, there are signs that it may be reaching bottom for this cycle in many markets. The first quarter figure was up from 12.6 percent nationally at the end of 2006, and office vacancy rates increased from 13.6 percent to 13.9 percent in the usually more volatile suburban locations. This overall uptick was the result of almost 12 million square feet of office space constructed nationally, but less than 10 million square feet of net absorption nationally during the quarter.

Retail Construction

Retail construction has seen more modest gains recently. Spending is projected to increase 3.5 percent this year and may experience a small decline next year according to AIA forecast panelists. Retail construction is the sector most closely connected to residential activity, since stores generally are added shortly after housing subdivisions are completed. With housing expected to see another year of weak activity next year, retail construction activity is expected to moderate also. Some of the major retailing chains, such as Wal-Mart, Home Depot, and Kohl's, have recently scaled back on their expansion plans.

Hotel Construction

Hotel construction has been the strongest nonresidential construction sector recently, with spending activity projected to climb by over 26 percent this year. However, once this current spate of projects is completed, activity is projected to level off, with almost no gains forecast by the AIA panel for 2008. Much of the current surge has been fueled by a round of casino construction, which is expected to slow in the near future. McGraw-Hill Construction reports data from Torto Wheaton Research indicating the national hotel occupancy rate has been climbing and will reach 68.7 percent this year, but ease off somewhat next year.

Institutional Construction

Institutional construction sectors are projected to show less volatility in 2008 than commercial facilities. Institutional construction spending is expected to increase just over 5 percent this year before easing back to 4.5 percent in 2008, according to AIA panel members. Additionally, the consensus growth for the major institutional construction categories is in the 4 to 5 percent range of growth for 2008.

Even with rising long-term interest rates, the financial position of state and local governments is strong enough to support continued growth in educational construction. Also, according to McGraw-Hill Construction, the education market has benefited more than any other sector from the recent interest in sustainable "green" design. As a result, AIA panel members expect a 4 percent increase in education construction in 2008, coming on top of 5.9 percent growth this year.

Health care is expected to see even stronger growth. With recent emphasis on increasing health-care coverage, including several state mandates for universal or near-universal coverage, health-care construction has become one of the fastest growing institutional construction categories. Panel members are projecting an 8.5 percent increase in spending this year, followed by an additional five percent gain next year.

"Construction activity in the nonresidential market has been robust this year so far, even exceeding the optimistic projections at the beginning of the year," said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. "This pattern should continue for the rest of the year, with more tempered growth moving into 2008."





Baker added, "As activity in the commercial market abates, the institutional sector is projected to see stable growth. The good financial position of state and local governments should support continued growth in the construction of schools, and health care facility construction has become the fastest growing institutional category based on several state mandates for universal or near-universal coverage."

Compensation Survey

Architecture, engineering, and environmental firm leaders are predicting an increase of 10% in incentive compensation spending for this year. Of the nearly 100 firms surveyed for ZweigWhite's 2007 Incentive Compensation Survey of Architecture, Engineering, Planning & Environmental Consulting Firms, 40% are predicting some level of increase, while 27% are expecting spending levels to remain the same. Only 14% predicted a decrease, and the remainder was undecided.

The survey defines incentive compensation as any kind of additional pay or award offered by a firm to its employees in addition to base wages, as a means of stimulating increased effort and motivating employees. Survey data show firms spent a median of 4.3% of net service revenue on incentive compensation in 2006, or $4,286 per employee.

Additional survey results indicate the most common incentive plans among architecture, engineering, and environmental consulting firms are performance bonuses, signing bonuses, referral bonuses, and profit sharing. Firm leaders also reported profit-sharing plans and performance bonuses have been their most successful plans.

Joining Forces to Better Compete

Jacobs Engineering Group Buys Carter & Burgess

The Pasadena, Calif.-based Jacobs Engineering Group, the second-largest engineering service firm in the U.S., with 160 offices in 20 countries, 49,000 employees and revenues exceeding $8 billion, announced Nov. 2, 2007 it has agreed to buy Carter & Burgess.

Carter & Burgess was established in 1939 as a two-man landscape architecture and civil engineering firm. Based in Fort Worth, Texas, it has grown into a full-service, multidiscipline consulting firm with 32 offices and more than 3,200 employees in major metropolitan areas across the U.S. Among its services, Carter & Burgess is a leader in landscape architecture and land planning.

"By joining forces with Carter & Burgess, we increase our presence in the fast-growing markets in the southern and western U.S., broaden our transportation businesses, strengthen our capabilities in mission-critical buildings, and introduce land development, distribution, warehousing, and retail buildings dimensions to our business," explained Craig Martin, Jacobs president and chief executive.

Jacobs' portfolio includes engineering design and construction ranging from infrastructure and defense to pharmaceutical, forestry and oil refining.

Carter & Burgess recorded $436.1 million in engineering design revenues last year, which ranked it 34th, according to Engineering News-Record, an industry journal.

Ben Watts, Carter & Burgess chief executive, said the merger allows Carter & Burgess to "leverage our capabilities in the market and compete for some of the largest projects in the world."

Jacobs Vice President John Prosser told the Texas media that layoffs of Carter & Burgess staff are not expected.

Carter & Burgess has grown over the years through the acquistion of some two dozen firms. Its most recent acquisition was in June 2006 when it took over Atlanta-based Day Wilburn Associates, a transportation planning and engineering firm.

Brickman Group Aquires Bozzuto Landscaping

On Oct. 23, 2007, The Brickman Group, Ltd., announced signing an agreement to purchase Bozzuto Landscaping, currently a division of The Bozzuto Group. The sale is set to close December 31, 2007.
Brickman, established in 1939, has 145 branch offices nationwide and serves over 10,000 commercial clients in 27 states, specializing in landscape maintenance, landscape architecture and construction services.

The Bozzuto Group, since 1988, provides real estate services, property management, homebuilding, acquisitions, land development and construction. With locations in Maryland, Virginia and North Carolina, Bozzuto Landscaping's 250 member team serves office and industrial parks, hospitals, schools, retail, apartment communities and privatized military community clients.

The two companies decided the best way to enjoy continued growth and serve a wider client base was to join forces.

"We decided to sell to Brickman because we share similar corporate principles and we know that all of our employees and clients will be well taken care of," said Tom Bozzuto, CEO of The Bozzuto Group. "It is critical that our energy, resources and capital investment have a razor sharp focus on our core real estate business, the creation, construction, and operation of exceptional, quality homes and apartments for our customers."

Peering into the Future

Each year since 1985, the editors of The Futurist magazine published by the World Future Society (wfs.org) select their top forecasts from predictions published in the magazine during the year. Most of the predictions don't necessarily impact the landscape industry, i.e.: The world will have a billion millionaires by 2025; fashion will go wired as technologies and tastes converge to revolutionize the textile industry--color-changing or perfume-emitting jeans, wristwatches that work as digital wallets and running shoes that watch where you're going; threat of another cold war with China, Russia, or both; the earth is on the verge of a significant extinction event; and expect a full-scale rush to develop the Arctic.

Prediction number six does impact the landscape industry, however: "Water will be in the 21st century what oil was in the 20th. Global fresh water shortages and drought conditions are spreading in both the developed and developing world. California is building 13 desalination plants that could provide 10% to 20% of the state's water in the next two decades. Desalination will become more mainstream by 2020." (From William Halal's "Technology's Promise: Highlights from the TechCast Project.")






Lake Lanier, Atlanta's main water supply, is dangerously low.


Water Scarcity

Water restrictions in Georgia are hurting the horticulture business, yet the Army Corps of Engineers is releasing more than a billion gallons of water ever day from Lake Lanier (pictured above) for out-of-state use. Lanier is Atlanta's water supply and its level is dropping dangerously low. The level has dropped 12 feet since the summer.

Governor Seeks Injunction to Protect Georgia's Water Resources

Georgia's drought prompted Gov. Sonny Perdue to file a preliminary injunction in mid-Oct. against the Army Corps of Engineers, seeking an immediate modification of the water flows leaving Georgia reservoirs to flow downstream "intended to provide roughly double the amount of water for endangered mussel and sturgeon species than that which would be provided by nature under these circumstances."






Georgia Gov. Sonny Perdue (left) filed an injunction against the Army Corps of Engineers to stop water flowing from Lake Lanier to Florida.


The Corps of Engineers releases more than a billion gallons of water ever day from Lanier. The Corps bases its water releases on the minimum flow needed for a coal-fired power plant in Florida and mandates to protect two mussel species in a Florida river.The water being drained from Lake Lanier for out-of-state use is the main case it point.

The governor called the Corps' actions "nonsensical" and an "ill-advised choice in favor of mussel and sturgeon species over Georgia citizens."

The Full Bloom Nursery in Clermont, Ga. reported doing 90 percent less business in the first two weeks of October than the first two weeks of October 2006. Fall is usually one of the busiest times for the nursery. Hours of the two full-time employees were cut, and seasonal employees are out of the question.

Sales in the urban agriculture industry exceeded $8 billion in the state last year, according to statistics from the Urban Agriculture Coalition. Industry officials project that the industry already lost $1.2 billion between June and October this year. If the drought continues, many nurseries and other landscape companies could fold.

Carol Crouch, director of the state Environmental Protection Division, is working on emergency water conservation measure for the governor. Mary Kay Woodworth, spokeswoman for the Urban Agriculture Coalition, said their representatives are talking with the governor's office about small business loans to help the landscape industry survive.

The state plans to revise its Drought Water Management Plan drafted in 2003, which the landscape industry was involved with. While it was based on the occurrence of a drought in 2000, it is not tailored to deal with a drought of this magnitude, nor the growth of metro Atlanta.

Many suffering nursery owners believe state officials waited too long to take action. Some predict Georgia reservoirs will be depleted in less than two months.

Marta Garland wrote Landscapeonline.com to report on the Georgia drought and its effect on the landscape industry:

"The total outdoor watering ban has crippled the landscape industry here. Over 11,000 landscape employees have been laid off in one week. If the state would allow us to water once a week, that would keep the plants alive. Previous to the extreme drought, people were wasting water like crazy. Builders would hire the cheapest landscaper they could find. I am frequently hired to "redo" these landscapes. Typically, I would find azaleas planted in the full sun with no topsoil or soil amendments used. When the plants fail to thrive, the homeowner will start watering three times a week to save them, and of course the plants rot and die. We have no regulation here on good landscape practices. All I can say, is this is a good opportunity to increase our professional standards."

National Association of Home Builders (NAHB)

According to the National Association of Home Builders' (NAHB) state and metro economic forecast, tighter lending standards and reduced availability of credit will complicate but not derail a national recovery in the housing market.

"Housing markets in parts of California, coastal Florida, Phoenix and Las Vegas are among the most vulnerable due to a boom in demand from 2003 through 2005 and speculative activity," said NAHB Chief Economist David Seiders. "Markets in parts of the industrial Midwest are vulnerable due largely to continuing weak economic conditions," he added.

The forecast notes that many markets around the country (Southeast, Texas, Pacific Northwest and Mountain states) have less subprime exposure, experienced modest and sustainable house price appreciation during the boom, and have relatively strong local economies. These markets are positioned to out-perform the national trends with earlier and stronger recoveries than the more troubled markets, according to NAHB's forecast. The contrast between the strongest and weakest markets across the country points out substantial regional variation and suggests that steep nationwide house price declines and mortgage defaults are unlikely. The NAHB is a federation of more than 800 state and local associations; about one-third of its 235,000 members are home builders and/or remodelers.

The five largest U.S. home builders are Centex; D.R. Horton; Kaufman & Broad; Lennar; and Pulte Corp.

Centex Corp. (NYSE: CTX) revenues for its fiscal second quarter ended Sept. 30, 2007 were $2.22 billion, and a net loss of nearly $644 million, according to company figures. Home building reported an operating loss of $953 million for the quarter. Housing operating earnings were $26 million, down from earnings of $259 million in the previous year. The decrease is a result of lower unit volume, an 8% decrease in the unit average sales price and higher sales incentives. For the current six months, revenues were $3.91 billion, 26 percent lower than the same period last year. The reported homebuilding operating loss was $1.12 billion for the six-month period this year versus earnings of $461 million in the same period last year.

D.R. Horton, Inc. (NYSE:DHI), the largest homebuilder in the U.S. (delivered more than 53,000 new homes in 27 states for the fiscal year ending September 30, 2006), reports these numbers:

Net sales orders, 4th quarter (ending Sept. 30):
2007: 6,374 homes ($1.3 billion)
2006: 10, 430 homes ($2.5 billion)

Net sales orders for fiscal year:
2007: 33,687 homes ($8.2 billion)
2006: 51,980 homes ($13.9 billion)

"Market conditions for new home sales declined in our September quarter as inventory levels of new and existing homes remained high while pricing remained very competitive," said Donald Horton, chairman of the board. "We also experienced reduced mortgage availability due to tighter lending standards, and buyers continued to approach the home buying decision cautiously. We expect the housing environment to remain challenging."

Lennar reports these third quarter results:

  • Revenues of $2.3 billion, down 44 percent from a year ago.
  • The homebuilding operation lost $787.7 million.
  • Deliveries of 7,636 homes, down 41 percent from a year ago.
  • New orders of 5,804 homes, down 48 percent from a year ago.

You get the idea. The top home builders are suffering.

Department of Labor (DOL)

The U.S. Department of Labor (DOL) reports that more than 26 percent of all landscape architects are self-employed, three times the average for most professions. The DOL also says employment opportunities for landscape architects are expected to increase "faster than the average" for all occupations through the year 2014.

That is partly because new construction must increasingly comply with environmental regulations, zoning laws and water restrictions, driving demand for landscape architects who can plan sites that meet these requirements while integrating them with the environment in the least disruptive way. In addition, landscape architects are getting more involved in preserving and restoring wetlands and other environmentally sensitive sites.

Landscape architects also help to determine the best arrangement for new roadways by giving advice about the accompanying topography, vegetation, walkways and other landscaping details. Federal programs, including the Transportation Equity Act for the 21st Century, are expected to spur employment for landscape architects by providing state and local governments with more funds for surface transportation and transit programs and their related landscape elements.

Department of Transportation (DOT)

The U.S. House in August passed amendments to the current transportation legislation, known by its acronym, SAFETEA-LU, authorizing $90 million to keep planning, research and development going across the country. However, the U.S. Senate has yet to act.

Kansas DOT is worried about potential, significant shortfalls in the federal Highway Trust Fund in fiscal year 2009, and is making contingency plans.

"There is a potential problem facing Kansas and all other states due to the possibility of the shortfall in federal funds," Secretary of Transportation Deb Miller cautions.

The Bush Administration's Fiscal Year 2008 mid-session budget review estimated revenues for the Highway Trust Fund would fall short of the commitments in the current federal transportation funding bill--an estimated $4.3 billion shortfall for Fiscal Year 2009.

The larger federal shortfall is blamed on lower-than-expected heavy truck sales resulting from new diesel emissions standards, increased outlays and flat motor fuels tax revenue. The $4.3 billion shortfall in revenues may result in a projected $16 billion cut in spending in FY 2009. From a state perspective, Kansas' share of the anticipated $16 billion cut is between $130 million and $150 million.

The Senate Finance Committee is considering fiscal options to offset the Highway Trust Fund deficit in 2009.

"We will face the same problem in the next fiscal year, said Jack Basso of the American Association of State Highway and Transportation Officials. "That is a matter that will be addressed in the reauthorization of SAFETEA-LU," Basso added.

Boston Area

Greg Denon, director of career services at Wentworth Institute of Technology in Boston says greater Boston continues to offer good job opportunities in architecture. "There is a good amount of growth in the area in industrial and commercial work, and in municipal building. Although the residential market has slowed, there is a steady stream of work in other areas, both domestically and internationally. He notes that landscape architects, because of the many different types of projects they pursue, can find work even when other construction slows. A strong portfolio is crucial in all design fields, Denon emphasized.

California

The California housing market will continue to slow in 2008, with house prices falling four percent, and nine percent fewer houses changing hands, predicts the California Association of Realtors (CAR). The Bay Area has the strongest housing market, CAR says.

"Compared with the Central Valley or the Inland Empire in Southern California, for example, the Bay Area has little new-home development, and therefore less stagnant oversupply of homes for sale."

Stephen Levy, an economist at the Center for Continuing Study of the California Economy, agrees with CAR's assessment. "We need housing to be attractive for jobs. And the prices simply got out of hand," he says.

Seattle

According to Realogics, Inc., there is a condo boom in Seattle. In 2007, eight condo buildings went up downtown with a total of 1,247 units (83 percent sold). For 2008, 12 new condo buildings will go up, with 1,843 units (53 percent are already sold).

John Midby, a principal of developer LEXAS Cos., notes all this condo building is going on despite "a 40 percent increase in construction costs in the past 18 months, a relative lack of places to build in-city condos." But Seattle has a strong economy. "Seattle (has) ... right now, probably ... more dynamic corporate activity than any other place in the United States," Midby says.

Las Vegas

"The Las Vegas real estate market will rebound on March 31, 2008," predicts, Don Foster Scoggins, a real estate appraiser with appraisersofLasVegas.com, "Las Vegas' number one appraisal firm as rated by In Business Las Vegas. He notes a "huge pent-up demand for homes in Las Vegas" and expects buyers who cannot get the financing now will find loans with lower rates in the coming months.

His optimism is bolstered by commercial development projects currently underway in Vegas. Developers are putting $2 billion a year into City Center, said to be the largest private construction project in the world. The $4 billion Echelon Place will be built between 2008 and 2010, which is another $2 billion per year being pumped into the economy. Encore at Wynn Las Vegas will be completed in 2008 at a cost of $1.8 billion.

New Jersey

NJ Biz states: "A perennial shortage of space in New Jersey combined with a growing desire to bring more 'green' into work and play environments is helping to increase the demand for landscape architects, the people who add function and beauty to shopping centers, golf courses, industrial parks and a host of other spaces. Their work involves a mixture of skills, including design, construction, land-use planning and familiarity with environmental issues.

"Developers and others are becoming more aware of what landscape architects do," says Scott Levy, the founder of Scott Alan Design Inc., a Hamburg landscape architectural firm, and the immediate past president of the New Jersey chapter of the American Society of Landscape Architects. Levy says there's more to his profession than simply dressing up a space with plants or grass. Rather, landscape architecture integrates the environment into people's living and work spaces in a way that benefits both.

"In urban areas, developers are looking to bring more green into their spaces," says Levy. "In addition to courtyards and lawns, this can mean rooftop gardens and other environmental initiatives that make a building look better while helping to cut fuel costs by conserving heat and other resources. Additionally, the state's open space initiatives have helped generate more design work for us."

In New Jersey, urban redevelopment also helps to drive business, says Lynn Yahia, a principal in the Manasquan landscape architectural firm Melillo + Bauer Associates.

"We're doing work in a former industrial site and other underused areas in places like Hoboken, Jersey City, Newark and Trenton," she says. "Rooftop development in particular is very active since space within a city is usually quite compressed. In residential and office facilities we've put up recreational space, including pools and tennis courts, on top of roofs. There's also a big demand for rooftop laws."

Canada

Marco Polo, Associate Professor, Ryerson University Department of Architectural Science and former editor of Canadian Architect, notes that a recent exhibition showcasing the work of emerging Toronto design practices suggests a promising future for architecture, landscape architecture and urban design. On June 8, 2007, about 500 people turned out for a Toronto exhibition (Twenty + Change) featuring work by emerging local architects, landscape architects and urban designers. "This enthusiastic turnout revealed the pent-up appetite for such an exhibition, the first of its type in the city in well over a decade," Polo exudes. "Young practices had been something of an endangered species in Toronto," writes Polo in Canadian Architect. During the economic recession of the early 1990s, Canada's largest metropolis saw many firms downsize. Young architects and landscape architects found it hard to sustain independent practices. "A generation of promising designers returned to more established firms. A decade of sustained economic growth has finally brought about the conditions under which new practices can once again flourish, and, for the first time since the early 1990s, Toronto's architectural scene appears to be on the verge of rejuvenation."






LASN Survey of Landscape Architecture Firms Shows Growing Revenues and Strong Outlook for 2008

LASN recently conducted an online survey of landscape architecture firms across the country. With cries of "It's a very strong economy" in some quarters and "We're headed for a recession" in others, we wanted to know if revenues were up in 2007, what the outlook was for 2008, if firms hired in 2007 and if they expect to hire in 2008. In addition, we wanted to know what sectors these firms anticipate growth in, what the trends are, if the firms have a marketing department, and what design software/technologies they're employing.






43.8 percent of the firms replying reported revenue increases by at least 10 percent in 2007. 8.3 percent saw increases above 35 percent. These numbers are slightly lower than survey results from last year.

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25.6 percent of the firms increased their workforce by at least 10 percent in 2007. This is also down slightly from 2006. However, more firms reported no change in workforce (45.5 percent) than survey respondents last year.












Slightly more than half (52.1 percent) of the firms surveyed anticipate 2008 will be a stronger year; another 32 percent expect a similar year.







In last year's survey, only 28.5 percent of the surveyed firms reported having a dedicated marketing department. That number increased in the 2007 version of the survey to 37.2 percent.












Historically LASN looks at three stock indicators to forecast the general business climate for the upcoming year: The Dow, NASDAQ, and the LCSI (LASN's index of 61 development-oriented companies). Last November the Dow was at 12,321 when LASN predicted the Dow Jones average would "reach over the 13,000 mark". Ironically, while the Dow had reached as high as 14,093.08 in late October, on this day 11/30/07 the Dow closed at 13,372. This is just shy of 2,000 points higher than January of 2006. The NASDAQ was just over 2,400 last November and was predicted by LASN to reach 2,500. On 11/30/07 it closed at 2,661. On 11/28/06 the LCSI sat at 1527.12 and was predicted to "push towards 1600". While the LCSI did reach as high as 1,831 in mid July, as of 11/30/07 it is down to 1,392. In 2008 watch the Dow and NASDAQ continue an up and down climb to 14,000 and 2,700 respectively as the overall economy stays in a slow but steady growth pattern. Also watch for the LCSI to rebound and gain back its 2007 starting position of 1,525 by late Summer 2008. --Source: NYSE, NASDAQ, Landscapeonline.com

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These graphs show the financial and interest rates since 2000. In 2005, the inflation rate hit 3.39 percent, retreating to 3.24 percent in 2006. Last year LASN predicted that the rate of inflation would fall to 2.75 in 2007 and it ended up dropping to an average of 2.18 percent. In 2008 rising oil prices will drive up prices on just about everything, however lower housing costs/property values will keep inflation in check. Watch for a 3.25% rate of inflation to pull at your pocketbook in 2008.

After dropping to 4.00 percent in 2003, the prime interest rose from to 8.25% in 2006, more than doubling in three years and prompting the housing market slow down. In 2007 that rate has begun to drop again to the current level of 7.50 percent. The 30-year interest rate has seen a similar pattern to the prime rate, although the rollercoaster ride is not as dramatic. The 30-year rate was 5.64 percent in 2005. That rate has risen, according to FreddieMac to 6.38 at a .5 point buy off in 2008. Watch for the Fed to drop interest rates at least once more in the months ahead to help stimulate the housing industry. However, that drop may be delayed as the Fed allows the excess inventory of new houses to be sold off and since lower interest rates mean higher inflation and a lower dollar on the international market, don't expect those rates to reach the lows of the 2003-2005. Also watch for the sub-prime fiasco to begin to find resolution. In general the market will stabilize being neither too hot nor too cold over the next couple of years. --Source: www.moneyfarm.com, www.inflationdata.com, www.freddiemac.com

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The single family housing market has had a tough year in 2007, especially coming off a great 2006. Overall 2007 permits, starts and projects under construction have seen drops in the 20% range over 2006 monthly closes. However most experts agree that if interest rates hold or drop by a bit and as developers sell off their excess units the market will rebound by late summer 2008. Still, from January through October, 2007 875,000 single-family housing permits were issued and 936,000 units were started (from earlier permits) so there is still single-family residential work for the 18,000 RLA's out there. Also, developers are not only sitting on excess inventory but they are holding back starting projects by about 2-4% more than in the earlier months of 2007, which means they are stockpiling permits in anticipation of a looser market in the months ahead. Look for permits to drop a little through February and starts to follow suit but as Spring picks up so will construction of single family houses at a growth rate of about 8-15% over the later months of 2007.

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While many single family homes sat on the market in 2007 causing a 20% down swing in permits and starts, the multi family housing market stayed fairly stable and in some instances grew. In fact for structures with 5 or more units the October seasonally adjusted starts were up 46% over September 2007 and 24.3% up over October 2006. This jump was due to a solid August and October in which 61,000 multi family units were started, representing more than 25% of the ytd 2007 total starts. This segment has been strong since April after which the lowest monthly start total was 20,000 in September. Still the hard number of permits for the 5+ unit structures is lagging behind 2006 but only by a percent or two, while October '06 to October '07 Seasonally Adjusted permits issued rose by that same 1-2%. Obviously this segment is staying the course and will provide large projects for landscape architects to focus on in the months and years ahead. Remember, the United States is still growing in population (one of one a few first and second world countries to do so) so demand will continue to grow for some form of housing for many years to come.

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This color-coded chart takes a looks at single-family housing authorized in each state with the top-10 most populated states identified by their population ranking. Note that the 4th most populated state is Florida but that state had more than 80,000 more permits than #1 ranked California and 75,000 more than #2 ranked Texas. While this trend has been consistent over the past few years, on the following page you will find that Florida only has two cities in the top 50 most populated (Jacksonville-13th, and Miami-45th). Looks like there is still plenty of room to grow in the southeast tip of the country.

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For the construction industry, one of the good things about the rising property values and low interest loans was that many residential owners took equity from their homes and used it renovate and add to their existing residences. While the bulk of this money was used on structure, in 2006 almost 18%, or $31.4 billion, was spent on "Other Property Improvements" (which includes landscape work). In 2007 that number is down a little but is still on pace to reach about $25 billion. However, as loan costs are rising and property values are coming down watch for this segment to stagnate until the single family sales begin to pick up towards the end of 2008. After that, as almost everyone knows, nobody buys a house without making at least a few improvements . --Source: US Census Bureau

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Another segment that continues to grow and add stability to the construction industry is Highway and Street development. Due to the $286.4 billion transportation reauthorization bill signed into law in August 2005 this segment is funded until 2009. Growing from $65.4 billion in 2005 to $70.9 billion in 2006, Highway and Street development should continue to rise in 2007 and 2008 by about 5%, putting the 2007 value of "Put-in-Place" construction at $74.5 billion and the 2008 number at $78.2 billion. While most of these dollars are spent on the building of the highways and streets themselves, in almost every case landscape planning and roadside landscaping are a part of the projects. Government projects go to the lowest bidder, but these projects can add stability to your cash flow and keep your crews busy. Also watch for greater emphasis on bridge building and reconstruction. This segment has been a boon for both the Clinton and Bush administrations, so watch the winner of the 2008 election work to keep this trend moving on down the road. --Source: US Census Bureau

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Another market affected by growing population is the educational market. Growing from $78.6 billion in 2005 to $86.0 billion in 2006 this market is mostly driven by state and local governments, followed by private monies and then by federal spending. So far in 2007 the value of Put-in-Place construction for educational facilities is up by 12.9% in the public sector and 20.2% in the private sector. Here is another area that will see moderate to strong growth over the next many years. The strongest segments of this market are Higher Education (split fairly evenly between classroom and student living projects), followed by primary/secondary schools and then pre-schools. --Source: US Census Bureau

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Evidently as health care becomes more effective, the need for religion is taking a back seat as health care construction in the private sector grew nearly 20% in 2006 and is growing at 11.6 in 2007. Religious construction tipped slightly downward, losing about 1.5% in 2006 and 2007 to a dollar value of $7.7 billion Put-in-Place. Worth noting is the heavy leaning of Health Care construction toward the private sector, with $33.2 billion spent in 2007 compared to only $6.3 billion spent by the public sector. With all the talk about going to a government-run system, this market could turn upside down in a heart beat. --Source: US Census Bureau

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Making up 15.8% of the total construction industry and almost 30% of the non-residential construction industry the Office/Commercial/Manufacturing segment of the market is going strong and grew by an average of 10.9% in 2006 and 11.5% in 2007. With commercial space leading the way at $82.2 billion, followed by office space at $55.4 billion and manufacturing facilities at $36.2 billion it is easy to see that the US is becoming more and more a service provider to a global economy. This is good news to the landscape industry as service providers more often need to present a beautified front for consumers. Watch these segments to continue to grow as long as vacancy rates and taxes stay low. --Source: US Census Bureau

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Growing by more than 16% in 2006 the Amusement/recreation segment is

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June 16, 2019, 10:30 pm PDT

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