Crunch Time

Crunch Time

The Numbers

It’s that time again.

With the economy on a sustained downturn West Coast architects are once again scrambling to stay afloat, and attention is shifting from design challenges to financial ones. The next six to twelve months—point out many— could prove to be the tipping point between pain and disaster.

According to the monthly AIA’s Work On The Boards survey, architects’ billings over the last six months, while stabilizing slightly in the last couple, have measured the lowest since the organization began tracking them 13 years ago. And the worst region of all right now is the west, due in large part to its dependence on the now-burst housing bubble.

From an informal survey of architects across California we learned that everyone has been hurt in some way by the economic slide. While the residential market has been hardest hit, few sectors appear safe. Every firm we talked to had at least one project that had been stalled or cancelled because of the economy. Most are having trouble finding new work, instead depending on contracts that were secured before the downturn.  

Smaller firms seem to have been hit the hardest, particularly those with projects bunched in the same building type or without big-money clients. Larger firms have fared better, especially because most have a wide diversity of work, and have been able to focus on more dependable (for now) international and institutional markets.

But everyone is mobilizing to find solutions. For now only a few firms have had to take drastic measures like laying off staff. Notable layoffs include a widely reported large round by Gehry Partners earlier this summer, which has yet to be confirmed by the company, a ten percent staff cut by LA-based CO Architects, and a layoff of six staffers by Johnson Fain (the last was reported by LA Curbed).

Other remedies include looking more aggressively for work, pumping up marketing efforts, and accepting projects that just a year ago most firms would never dream of taking.

 “You don’t avoid anything anymore,” said James Gates, a principal at San Diego firm Public. His eight person firm recently saw two major residential commissions in the city get scrapped; projects that the firm was depending on to get them through the next two years.  “You do some of the nasty remodels. You make sure it’s done on time without mistakes. You have to show you’re committed.”

Firms are also trying to get into more stable sectors, fighting for institutional projects. But with the larger firms getting into the same boat, it’s not easy.

Mark Cavagnero, principal at San Francisco firm Mark Cavagnero Associates, points to a recent competition for a small theater addition in Aspen, Colorado. Other firms included Polshek Partnership and Barton Meyers.

“Two years ago these firms would never be chasing a $15 million project,” he said.  

Other firms have focused efforts on non-building realms like research and development. But no matter what they come up with almost everyone says that they may have to take more drastic measures if the downturn continues for a while longer.

“We can lumber along through the end of the year, but if things don’t change 2009 could be hard,” said Cavagnero, whose office has 30 people.

Cavagnero, among others, hopes things will pick up with a new administration at the end of the year (he’s rooting for Obama, who he says will inject a needed dose of energy and responsibility into the environment). But the anxiety is palpable, and everyone seems on edge.

“For a long time no one felt obliged to ask how others were doing,” said Bill Leddy, a principal at San Francisco-based Leddy Maytum Stacey. “Now when I see my peers they wonder ‘how’s it going for you?’”