High borrowing costs and weaker development activity continue to pressure firm revenues
Global architecture firm HKS, widely recognized for its sports venue designs, is reducing its workforce and closing one of its U.S. offices as ongoing challenges in the real estate market continue to affect business activity. Rising interest rates, tighter lending standards, and broader economic uncertainty have slowed development across several property sectors.
According to company leadership, HKS plans to eliminate approximately 80 positions from its global workforce of around 1,800 employees. The firm, founded in Dallas in 1939, operates 29 offices worldwide, including locations in London, Singapore, Dubai, and Brisbane. It is currently one of the highest-revenue architecture firms in the United States, with roughly 600 employees based at its Dallas headquarters.
Dan Noble, the firm’s former CEO and current CEO emeritus, said the real estate market is experiencing a significant slowdown. He explained that financing has become more difficult to secure, with banks taking a cautious approach to lending. As a result, many residential and mixed-use developments are no longer financially viable under current market conditions.
While residential, mixed-use, and speculative office projects have experienced reduced activity, Noble noted that several of HKS’ other business divisions remain strong. The firm’s hospitality, healthcare, life sciences, education, and sports design teams continue to secure major projects. Among its most notable current assignments are the new football stadiums for the Washington Commanders and the Cleveland Browns.
Noble stepped down as CEO in January after leading HKS since 2014, handing leadership to Heath May, who now oversees the company from its Los Angeles office. As part of its operational changes, HKS also plans to consolidate its California operations by closing its smaller San Diego office and integrating those functions into its Los Angeles location.
Economic Pressures Continue
Economic uncertainty has affected multiple industries, with ongoing geopolitical tensions, higher fuel costs, and persistent inflation placing additional pressure on businesses and consumers alike.
The architecture sector has also felt the impact. Industry data from the American Institute of Architects (AIA) and software provider Deltek showed that architectural billings declined in May compared with the previous month. The report also indicated that clients are delaying existing projects while initiating fewer new developments.
Business expectations remain cautious across the industry. Around one-quarter of architecture firm leaders anticipate billings will decline by at least 5% during the second quarter compared with the first quarter. This follows a 21% drop in billings recorded during the first quarter compared with the final quarter of 2025.
Despite softer demand, relatively few firms believe they currently have excess staff. According to the same industry survey, only about 15% of architecture leaders reported being overstaffed.
Merger Activity Accelerates
As market conditions remain challenging, mergers and acquisitions have become increasingly common within the architecture and design sector. Combining firms allows companies to reduce operating expenses, streamline resources, and strengthen their market presence.
One recent example is Corgan’s acquisition of Washington, D.C.-based Fox Architects, expanding its presence in the Mid-Atlantic region. Earlier, Corgan also acquired New York-based Cooper Robertson, a firm known for large-scale master planning and public space design.
HKS has not disclosed which offices or departments will be most affected by the workforce reductions. In a company statement, Chief Human Resources Officer Michelle Carroll said the layoffs were part of a targeted effort to better align the firm’s talent and resources with evolving client demands, market conditions, and long-term business objectives.
Carroll emphasized that the decision was made after careful consideration and expressed appreciation for the employees whose positions were affected. She added that HKS remains focused on maintaining a strong foundation for future growth while continuing to deliver high-quality services to its clients.
Noble noted that downturns in the real estate industry are not unusual, saying he has experienced several similar market cycles throughout his more than four decades in the profession. He believes the current adjustments are intended to strengthen the firm’s long-term position as market conditions eventually improve.
Source: Original reporting by Candace Carlisle, Andy Peters, CoStar News.
