To survive the continuing recession, architects in LA—sharply affected after years of impressive growth—are reinventing themselves, employing a variety of cost-cutting strategies and expanding into previously unexplored terrains to drive revenue. “Architects are being forced to reconsider what their market is. You have to package yourself toward a client of the future,” said Nate Cherry, vice president at RTKL.
One important strategy is the diversification of services, stretching practices beyond hard-hit areas like housing. For a firm like Thomas P. Cox: Architects, a specialist in condominium development, this has meant pursuing work in areas like student, senior, and affordable housing. It has also required stepping-up business development efforts. “We have to pursue projects with reckless abandon,” said Daniel P. Gehman, a principal at the firm. “We used to decline work if it didn’t meet a certain threshold for size. We obviously can’t do that anymore.”
Courtesy Debi Van Zyl
"Real estate development is counter-cyclical. When one market is down, another is up,” said Scott Hunter, corporate commercial practice director at NBBJ.
Some firms are expanding into completely new practice areas. For instance, Silver Lake–based architect Barbara Bestor is acting as creative director on a number of brand identity projects, working on graphics, logos, and web identity for clients that include Fuse Entertainment, Pitfire Pizza, and several start-up restaurants. Another architect, LA–based Debi Van Zyl, is finding some success at selling hand-knitted children’s dolls on the website Etsy.com. One doll, named Bernard, looks like a cross between a hammerhead shark, a lizard, and an alien; none wear black-rimmed circular glasses.
Architecture firms are also keeping a close eye on where and how federal stimulus money is being disbursed, hoping to capitalize on better funding in the public sector. While most firms admit these sectors have slowed as well, institutional markets are still faring better. Firms that pursued projects in institutional and civic sectors such as healthcare, education, and public infrastructure prior to the downturn are better positioned to ride the recession. For instance, HMC architects began a strategic planning initiative five years ago to expand the firm’s positioning within the healthcare and higher education markets. As a result, according to Hal Sibley, managing principal, “We’re fairly busy with work.”
While global architects and larger firms encroach on the employment of many local firms here, architects in LA are looking abroad. Many point to the burgeoning middle classes in Asia and South America, and the relative wealth of Middle Eastern countries as continued sources of work. Additionally, local firms argue that Los Angeles’ legacy as a city of innovation in architecture can position them well for global projects.
The hallmarks of Los Angeles architecture, especially the emphasis on an indoor/outdoor lifestyle, have global appeal, emphasizes NBBJ’s Hunter. “The connectivity to the outdoors translates well across the world.” Hunter points to his firm’s work on the Korean Animation Museum in Bucheon, South Korea, with a public paseo through the site and roof terraces that reflect a nearby park that will open in a few months.
In addition to seeking new revenue streams, many firms are employing creative cost-cutting measures. It’s been well documented that local firms have reduced headcounts through layoffs, hiring free interns en masse. But many are reducing executive salaries and bonuses as well, and some have taken more drastic measures, including taking on projects at-cost to retain employees. Bestor is renting out her well-regarded home in Silver Lake this summer to reduce her overhead.
Some architects are walking away from the instability of large-firms employment altogether, finding that the recession allows the freedom to work independently. Bo Sundias, a founder and principal at Bunch Design, believes that “if you’re going to start up, start up now.” Sundias said that with very low overhead and tight financial control of his expenses, his firm can consistently underbid competitors.
Several architects believe there are other silver linings in a dire economy. Less expensive materials, reduced construction costs, and cheaper long-term leases were repeatedly cited as some of the advantages to building now. And while no one believes the recession has ended, there are indications the worst may be over. The American Institute of Architect’s Architecture Billings Index, after several quarters of steep declines, reports that April’s index of 42.8 was less than a point below March’s 43.7, suggesting the industry may be turning a new corner.