Business conditions for architecture firms in Iowa and the Midwest strengthened in the fourth quarter of 2025, resulting in increased optimism at the start of 2026, according to the American Institute of Architects Iowa Chapter’s fourth-quarter market report.

The optimism shows resilience that is evident by a rebound in hiring, the report showed.

According to the report, 47% of firms are planning to increase staff, up from 31% in the third-quarter.

The strengthening business conditions in Iowa and Midwest are in contrast to the weak conditions that persisted for firms in other parts of the country, the report said.

“Architecture firms across the Nation have faced challenges this past year, however the Midwest is showing resilience,” Jessica Reinert, executive director of AIA Iowa, said in the report. “Seeing our region’s billings rise steadily from 50.1 in September to 51.7 in December demonstrates the strength of our architecture firms. This fourth consecutive month of growth signals that clients in our region are confident and moving projects forward, positioning Iowa and the Midwest as a leader in the industry’s recovery.”

Despite the optimism, the overall economy remained the primary concern for nearly 60% of architecture firms. Additionally, while inquiries for new work have risen to 29%, actual signed design contracts have seen slower growth (6%), indicating that while interest is high, some clients remain hesitant to fully commit to construction phases.

The architectural profession is known to serve as an indicator for construction activity nine to 12 months in advance. 

Key findings from the Q4 2025 report:

• Rising optimism and workloads: Optimism among Iowa firms climbed to 56% in Q4. The confidence is backed by heavy workloads, with 58% of firms now managing more than 21 active projects, an increase from 50% in Q3.
• Sector shifts: The office sector has risen to claim the top spot for revenue percentage, displacing K-12 education. Additionally, the market has pivoted back toward ground-up development, with new construction capturing 54% of the market share.
• Construction value: There is a clear shift toward larger project values. Medium projects ($1 million to $10 million) captured 46% of the market, overtaking small projects (under $1 million), suggesting a pipeline of more substantial, long-term work is becoming active.
• Regional growth: While big cities (over 50,000 population) continue to drive the majority of activity (52%), small cities (10,000 to 50,000) saw a notable expansion in market share to 24%, indicating that mid-sized communities are playing an increasingly vital role in the state’s development.