2025 Year in Review: Disruption, Adaptation, and the Planning Systems That Will Shape AEC Firms in 2026
The past five years have reshaped the landscape for architecture, engineering, and design in ways few could have anticipated. What began as isolated pressures — rising interest rates, shifting demographics, new technologies, global instability, and policy swings — accumulated slowly at first, then gathered momentum. For a long time, these forces felt significant, but not yet transformative. Firms adapted at the margins, absorbed the strain where they could, and continued operating within familiar patterns.
2025 changed that. This is the year when disruption became undeniable, unavoidable, and fully visible.
The year when firms could no longer “wait it out.” The year when five years of mounting pressures finally converged in ways that touched every part of practice: markets, workloads, staffing, procurement, operations, and the economics of design itself.
The convergence of these forces didn’t create one single crisis or one single opportunity — it created a reconfigured landscape. Markets behaved differently. Clients evaluated differently. Work flowed differently. The ground shifted under every segment of practice, revealing a set of structural changes that now define the conditions AEC firms must operate within. What follows is a clearer look at what actually changed in 2025 — not abstract trends, but the tangible shifts that shaped the year and will continue shaping strategic decisions in 2026.
PART I — WHAT ACTUALLY CHANGED IN 2025
1. Disruption Arrived — Amplified by Forces Building for Years
The digital transformation that had been progressing slowly in the background — AI tools, automation, new construction methods, BIM maturity — collided with economic and policy shocks. Rising interest rates reshaped pro formas, and the broader housing crisis continued to influence political and market decisions across the country. What had been abstract became tangible. Firms spent 2025 reevaluating assumptions, measuring exposure, and questioning whether they were structured for the market they actually occupy.
2. Demographics and Culture Shifted Under Every Firm’s Feet
Baby boomers continued retiring. Gen X and Millennials stepped into ownership roles. Gen Z entered the workforce with a different approach to work, technology, and communication — shaped in part by the long tail of COVID and the normalization of hybrid work.
On the client side, younger decision-makers brought new expectations:
they research digitally long before contacting a firm
they expect current, credible case studies and photography
they value clarity, purpose, and a well-articulated point of view
they choose based on alignment and expertise, not legacy networks
Relationships still matter deeply — but clarity and digital credibility now matter just as much.
3. Competition Reshaped the Landscape — Again, but Differently
Consolidation: Large firms continued expanding through acquisition and cross-regional growth.
Global competition, reframed: International practices remain strong competitors, but Buy Canadian rules restricted eligibility for U.S.-headquartered firms with fewer than 250 Canadian employees on public-sector work. This created a temporary window of opportunity for many Canadian and non-U.S. international practices.
Role-blurring: Developers, contractors, real estate conglomerates, and tech-enabled providers continued delivering strategy, interiors, feasibility, and early-phase design — directly competing with architects.
Fee pressure: While competition played a role, 2025 fee compression came primarily from clients requesting reduced fees, narrower scopes, and more fixed-fee models. The pressure was real, visible, and felt across nearly every sector.
4. Five Forces Reshaping Demand
Condo Market Collapse: Broken pro formas, unsold inventory, and frozen pipelines stalled the condo sector — particularly affecting 20–40-person Toronto firms that historically relied on this market.
International Student Permit Caps: Post-secondary institutions lost billions in expected revenue, leading to building closures, layoffs, and broad cancellation or postponement of capital projects. Education work contracted sharply. The housing crisis amplified these effects, making the policy reversal politically unavoidable.
Office Market Rebound: After years of weakness, late-summer return-to-office mandates triggered a surge in workplace interiors, retrofits, and reconfigurations — one of the year’s few bright, fast-moving pockets of demand.
Leadership Turnover: New leaders brought new values — digital fluency, climate considerations, equity, and a preference for structured business discipline.
Technology & Delivery Inflection Point: AI-assisted feasibility, analysis, code research, and visualization tools advanced, though adoption remains early. Modular and industrialized construction expanded in targeted sectors. Internal capability building became essential.
PART II — HOW FIRMS MUST ADAPT IN A PERMANENTLY UNSTABLE ENVIRONMENT
With disruption touching every part of practice, the firms that moved forward in 2025 were those who invested in clarity, alignment, and adaptability. Five areas proved central.
1. Marketing Is Shifting Into a Strategic Discipline
Across the industry, firms have been strengthening their business foundations — clearer goals, tighter systems, and stronger operational discipline. In 2025, this evolution extended decisively into the realm of marketing and business development.
Firms began recognizing that marketing cannot remain a collection of independent activities. To navigate rapid change, they now require a cohesive, purpose-driven program that connects visibility, relationships, and pursuit strategy.
This shift doesn’t require more activity — it requires alignment.
The firms gaining traction are those operating with:
a clear objective
a defined point of view
unified marketing + BD systems
a consistent, credible presence
This ensures clients understand a firm long before a proposal is issued.
2. Evidence-Based Planning: Strategy Begins With Truth
In 2025, firms that made progress were those willing to confront reality through a clear inventory of systems, tools, digital presence, proposal discipline, sector concentration, and strategic fit.
From that truth-first foundation, a simple structure kept firms focused and adaptable:
Finish Soon — small fixes that strengthen fundamentals
Plan Next — larger improvements requiring sequencing
Try and Review — short tests to explore new markets or approaches
In a volatile environment, this pragmatic approach turned strategy into motion.
3. Adaptive Reinvention: Evolving With the Market
Reinvention doesn’t require an overhaul. It often requires a shift in emphasis, communication, or focus.
Jaguar’s transformation in response to electrification and new buyer demographics illustrates a broader pattern: across industries, companies facing simultaneous technological and demographic shifts are rethinking how they express value.
For AEC firms, this often means reconsidering market focus, rebundling services, updating messaging, improving client experience, or refreshing identity — evolving the expression while preserving the essence.
4. Innovation as a Practice Capability — Built Realistically
2025 demonstrated that innovation lies between hype and dismissal.
AI is advancing, especially in feasibility, analysis, visualization, code research, and documentation — but adoption remains uneven across the profession.
Industrialized construction is scaling, particularly in repeatable building types — but it is not yet universal.
Internal capability building — training, standards, experimentation — now matters more than tool acquisition.
Innovation is no longer optional, and requires realistic, structured investment.
5. Succession, Identity, and the New Buyer
As next-generation leaders rise within firms, a parallel shift is happening among clients. Both groups expect clarity, transparency, strategic partnership, and strong digital communication.
Succession is identity transition.
2025 showed that firms willing to refresh their voice, sharpen their message, and align their presence with modern buyers gained momentum — even in difficult markets.
PART III — PREPARING FOR 2026: TURNING INSIGHT INTO ACTION
If 2025 revealed the extent of disruption, then 2026 is the year firms must turn clarity into execution. Three elements anchor a strong start.
1. Budgeting Turns Strategy Into Commitment
Budgeting is not a spreadsheet. It is prioritization.
A strong budget recognizes dollars and hours and funds the full ecosystem of systems, content, pursuits, visibility, research, internal time, and strategic reserve.
Maintenance years require ~3%.
Growth years ~5%.
Transformation years 8–10%.
Budgeting is the moment strategy becomes real.
2. A One-Page Operational Plan Creates Alignment
A concise, visible plan — capturing priorities, systems, BD focus, resources, accountable leads, and checkpoints — keeps firms from drifting. In a year of uncertainty, clarity is a competitive advantage.
3. The 90-Day Start Program Converts Ambition Into Momentum
Most plans fail because they never begin.
The 90-day start turns intention into progress by defining:
3–5 foundational actions
clear ownership
realistic hours
30-day checkpoints
By April, firms know whether their plan is working.
4. Cadence Makes Strategy Durable
Monthly reviews, quarterly leadership sessions, mid-year recalibration, and rolling forecasts keep strategy alive and adaptable. Cadence — not intensity — is what makes a plan durable.
CLOSING REFLECTION: WHERE FIRMS FO FROM HERE
After five years of accumulating pressure and one year of undeniable convergence, one truth stands out:
AEC firms do not need more tactics. They need clarity, focus, and systems that run.
The firms that will thrive in 2026 are those that:
see disruption clearly
adapt deliberately
evolve thoughtfully
plan realistically
execute consistently
communicate with purpose
build capability intentionally
and lead with conviction
2025 was the year the ground shifted. 2026 is the year firms decide who they will become on that new ground.
And the planning tools now available — from budgeting to the one-page operational plan to the 90-day start — give leaders a path to move from reaction to reinvention, one structured step at a time.
