Healthcare Design Sector Surges: Interior Design's 2024 Healthcare Giants Report Reveals Robust Growth

Interior Design Magazine's latest "Healthcare Giants" report highlights a thriving healthcare sector, which continues to outperform hospitality as the second-largest market. The industry experienced significant growth in 2023, defying earlier predictions of a slowdown. Design fees saw a substantial increase, alongside a notable rise in project volume.

Key Takeaways

• The healthcare sector has solidified its position as the second-largest market, surpassing hospitality.
• Design fees in healthcare increased by 26% in 2023, reaching over $880 million.
• Project volume saw a 19% uptick, marking a 105% increase since 2019.
• Acute-care facilities, outpatient care, and clinics remain the top three subsectors.
• The U.S. remains the primary growth area, particularly in the South.

Healthcare Sector Dominance and Growth

Healthcare has firmly established itself as the second-largest sector, a position it first claimed in 2020. In 2023, the sector demonstrated robust growth, with design fees climbing by 26 percent, translating to a total of $880,469,047. This figure represents a significant 45 percent jump since 2019. The number of projects also surged by 19 percent, more than doubling the 2019 figures.

Top Performing Subsectors and Geographic Trends

The leading subsectors within healthcare remain acute-care facilities, outpatient care, and clinics. These segments are projected to continue driving the sector's growth in 2024. While the majority of projects are located within the U.S., the southern region is experiencing the hottest growth. International work, accounting for about 10 percent of projects, is concentrated in Asia, Canada, and Europe, with a third of "Giants" anticipating further international market expansion.

Leading Firms and Market Dynamics

Perkins&Will leads the 2024 Healthcare Giants rankings, followed by HKS and HDR. The report also notes the emergence of ten new firms in the rankings, reflecting market growth and diversification. Firms like LS3P saw substantial movement, jumping 15 places due to a significant increase in healthcare income.

Furniture, Fixtures, and Construction (FF&C) Trends

While the overall ratio of FF&C has been leaning towards furniture and fixtures in recent years, healthcare remains an exception. Despite slowing construction and rising costs, the healthcare sector has maintained its focus on FF&C, with a 23 percent year-over-year increase and a 50 percent rise compared to 2019. Healthcare Giants anticipate a further 20 percent FF&C growth in 2024.

Future Outlook and Challenges

Looking ahead to 2024, Healthcare Giants predict a 20 percent growth in FF&C. However, their overall outlook for the sector anticipates a 16 percent decline, potentially due to economic uncertainty and the winding down of long-gestating pandemic-era projects. This forecast suggests a closing gap between healthcare and hospitality in terms of design fees.

Regional Growth Projections

The U.S. remains the dominant region for growth, with 95 percent of firms predicting expansion. The Midsouth and Southeast regions are particularly strong, with 59 percent of firms expecting growth. Internationally, Asia and Europe show potential for increased activity.

Segment-Specific Growth Predictions

Outpatient procedure/surgery centers and assisted/senior living facilities are among the segments with the highest percentage of firms predicting growth in 2024 (60% and 57% respectively). Mental health facilities also show strong growth potential at 55%. Acute-care hospitals, while the largest segment by fees, have a lower growth prediction at 43%.

Sources

• Interior Design Spotlights 2024 Healthcare Giants, Interior Design Magazine.
• Healthcare Giants 2022 - Interior Design, Interior Design Magazine.