Area Architects Have Designs on Business Improvement in 2010
The economic downturn hit the construction sector across the board, from builders all the way back to the architects themselves. While the historic effects are reportedly on the wane for this industry, local architects draw up their own tales of the Great Recession, and offer some thoughts on how they will recognize the signs of recovery.
Growing numbers of competitors from outside of the region, private-sector financing not readily available for new construction, and cutbacks in staff numbers and workdays … wait, wasnt this just reported about the construction sector?
Recently BusinessWest spoke to the people holding the hammers about the nature of the building trades and how the economy was affecting them in unprecedented ways. While area tradesmen knew the news wasnt very good, most reported on how they are successfully navigating these turbulent times.
However, another key component of the construction sector, the architecture industry, has also been finding its business hit, and hit hard, by many of those same forces, and they too have undertaken measures for successfully riding out the economic downturn.
John MacMillan is president of Rheinhardt Associates in Agawam. Like construction workers out in the field, he said that competitors from outside the area have been bidding on design jobs in numbers hes never seen in his 25 years in the industry. Its very fierce, he told BusinessWest.
But while industry analysts foresee the potential for grim times ahead in the construction sector, architects and those who monitor the industry have designs on a much better 2010.
Kermit Baker is the chief economist for the American Institute of Architects, and in that organizations Billings Index, a monthly measurement of the number of projects on the boards for architectural firms, he reported that, while billings were at historically depressed levels in March, that months confidence index of 46.1 reflected an increase from Februarys 44.8.
This figure is the highest recorded since August 2008, and while an index rating over 50 is a mark of growth in the industry, Marchs numbers indicate a four-point increase over the previous two months.
We could be moving closer to a recovery phase, Baker reported, expressing that old faithful known as cautious optimism. But he added that firms are still reporting an unusual amount of variation in the level of demand for design services, from improving to poor to virtually nonexistent.
Its a familiar story for architects in Western Mass., who say their firms have faced challenges like nothing theyve seen before. For this issue, BusinessWest looks at the blueprints for the business of architecture, and what designs some area firms have for a hopeful 2010.
Big Fish in a Small Pond
Leon Pernice has been designing buildings from his home office in West Springfield for close to 50 years office buildings at the Mercy Medical Center in Springfield, several area churches, the municipal center of Brimfield, and numerous senior residential facilities.
Like everyone else, he said that competition has reached numbers that hes never seen.
For such competition, he added, the number of jobs that his firm usually bids has dropped in reverse proportion. Theres work out there, he said, but much less private work and more public. And when I say more public work, that doesnt mean theres a lot of it, though.
For smaller projects, he said, firms are coming from far afield, which was once only the case for the largest regional jobs.
While large, high-profile projects typically had drawn architectural firms from all over the nation, something that Pernice said was perfectly understandable, the top-tier projects are often financed by boards of directors or trustees who have different criteria for their selection process, he said diplomatically, adding that he is unsettled by the fact that the smallest jobs also now see bidders from outside the area.
When you have municipalities assigning their smallest work to architects out of the area I dont know how that works, he said while shaking his head.
MacMillan agreed, noting that his firm has faced competition from outfits that never went after this market, meaning mid-scale to larger scale projects such as the Berkshire Medical Center, Belchertown Fire Department, Agawam police station, and currently the Holyoke Multi-Modal facility, among others.
A lot of those offices are Boston-based or, in some cases, from New York. We never used to see them before, he said. Were getting firms that used to work at a different tier high-design firms from Boston or Cambridge, 100-plus offices with business-development staff and marketers.
For ourselves, having this competition, with the bigger guys bottom feeding, he continued, weve had to shift some focus onto projects that used to be too small for us. Thats where we are now.
Rheinhardt Associates has been designing for the public sector for more than 50 years, he said, and with stimulus projects and municipal upgrades that cant be put off, that sector is where design work is holding steady.
In order to compete for the larger projects that come to bid, MacMillan said that his firm has taken a cue from the competition to remain a key player.
Weve teamed with larger firms, he explained. We realize that is what we have to do, because the day is not here where we can land the largest projects on our own, especially not with the competition.
When the projects are local, he continued, that regional expertise is what we can bring to the table. Sure, its a smaller piece of the pie, but at the end of the day, we are supporting this firm competing against other large firms. This is unusual for us. In a better climate, the locals might carry the day entirely, but these are not the times for that.
Back to School
As the current principal of Juster Pope Frazier Architects in Northampton, Kevin Chrobak said that some words of wisdom from one of the founders sketches out a winning plan for his firm.
Jack Frazier used to have this saying, you have to learn to enjoy the slow times as well as the fast times, he said.
As a means to that end, Chrobak said that JPF has a policy of flex time for employees, one of its techniques for riding out the economy. Its a win-win situation here, he explained, which gives people the ability to deal with their own schedules as they see fit. People have used flex time to spend more time with their families without really impacting our ability to do projects. It also makes them a bit more appreciative of working here.
And during straightened times, he added, the firm doesnt sweat the bottom line on a 40-hour workweek.
But JPF is fortunate as a smaller firm, with only six employees, not to be facing tough decisions at their drafting tables or their accounting ledgers.
We have a strong portfolio of repeat clients, with decent projects, he said. But our size allows us to stay largely outside the harsh effects of the downturn. The bigger firms might feel the need to constantly bring in new projects, but we dont really feel that burden.
For a small office, Chrobaks firm is responsible for numerous big-ticket projects, such as the Eric Carle Museum in Amherst, the Longmeadow Fire Station, and the Springfield Visitor Information Center, to name just a few. He says that repeat clientele has been a major player in JPFs strength and vitality through the recession.
Having diverse clients and a diverse portfolio has helped us very well, he said. But while his office stays busy with numerous projects, Chrobak said that he is aware that the number of projects in the area is small. Theres just not a lot of new construction out there.
UMass Amherst is consistently a source for much of the areas vitality in design and construction, Chrobak said, adding that they are a real boon to our firm as a source of design work for us, and the construction industry in general. Theyre one of the few organizations that are doing any construction work on that scale. I dont think they get enough credit for that.
Christopher Riddle, a principal with Kuhn Riddle Architects in Amherst, made a wave-like motion with his hand to describe the variation he sees for this areas architectural business, specifically addressing the market for educational work that has neither real highs nor lows. UMass and the overall strength of higher education has been a great lifeline for the regions architects, he said.
They have fluctuations, to be sure, he said, but they dont go away altogether. They dont go up and down with a great amplitude, but stay fairly regular with a consistent volume. A lot of our business is either directly or indirectly associated with the health of the education industry in Western Mass.
Other sectors that are engaging projects are also known for their overall stability. Health care continues to draw new business, as does the transportation industry, which MacMillan said is responsible for a large part of his firms current planning.
In addition to the Maple Street project for the Holyoke transportation center, MacMillan said the PVTA is responsible for a good volume of work in rehabilitating many of its older structures. That repair and renovation market, he said, is a source of a lot of design work for many architects in the area.
Crediting UMass Amherst again, Chrobak applauded its House Doctor renovation program as a good source of work for many area firms, including his own for the past 20 years. Essentially it is a program whereby a small group of architects are hired on retainer to work on an equal number of projects for renovation.
A lot of local firms really rely on that, he said.
Sketching It Out
Riddles partner, John Kuhn, expects this recession to have a lasting impact on architecture.
There is a shift toward sustainability and green systems, he said. And I think the days of subdivisions with McMansions on cul-de-sacs with funny names is over. Thats a completely dead market.
In agreement, Riddle said that clients have had a renewed focus on buildings systems, with an eye towards energy efficiency and alternative means of making a building economically viable, not just at the ribbon cutting, but for a longer span of time.
Since the recession officially started in the fall of 2008, he said that KR has tackled four LEED-certified projects totaling $17 million. Its design for New England Environmental, an Amherst-based consulting firm, aims to be a LEED platinum structure, the highest level of certification.
Riddle said that energy systems are a particular interest of his, and he hopes this renewed enthusiasm drives more design projects in the future. We spend a lot of time trying to optimize new construction, he said, trying to keep the energy consumption of new buildings down. It doesnt matter how sophisticated new buildings are now. Thats easy. What you have to do is try to figure out how to deal with the enormous, vast numbers of existing buildings.
Opting to look at the current market in a positive light, Kuhn said that this recession brought a lot of creative change to the industry.
Its a very exciting time, in many ways, for architecture, he continued. The types of buildings that were working on, and the way we deliver projects, are all changing. The key is to stay nimble.
Responding to the positive forecast from the AIA, Kuhn said that he reads the industry reports, but he doesnt take them too seriously.
I dont track the stock market, he explained, nor do I take to heart what I read on the front page of the paper. What I think of as indicators are the people you run into every day on a job site, what you hear from them at the coffee shops. What is the housepainter or carpenter or building owner seeing and saying?
Those field notes are one way to find hope for an industry-wide turnaround, he said, but when all is said and done, hell know that business is picking up when the phones start ringing again.
Drawing upon the experience of increased firms at public bids, Pernice said that, for him, recovery will be manifest in smaller numbers of those competitors from out of the area.
Ill know it when you go to an open review session for a project to find eight people there instead of 28, he said.
MacMillan said that his projections are for a flat quarter ahead, with his firm staying busy, but with smaller-scale and shorter-term projects than he is used to.
We usually carry a backlog thats anywhere from five to eight months, he said, and thats very healthy. Today, its down to two months, max. When I start seeing a bigger backlog, Ill feel comfortable.
But echoing the hopeful uncertainty from most in this industry, he said that all it takes is one significant project to turn the tide altogether.
That would be a huge bump for us, he said. So, it could be next week, or next month.