It's Ugly Out There

It's Ugly Out There

Architects know the last year has been ugly. AN followed the downturn via the AIA’s consistently worsening Architecture Billings Index, but yesterday, the group released its most sobering numbers yet. In its semi-annual Consensus Construction Forecast, the AIA predicts that the industry will continue to decline through the end of the year, with a full recovery expected no earlier than 2010. Meanwhile, confirming the gloom that has descended upon offices around the world, Archinect released the results of a reader survey that received thousands of responses, many of them dire, though many also not without hope.

According to the AIA’s forecast, which analyzes a half-dozen market studies from the likes of Moody’s and McGraw-Hill (they’re compared in an interactive table posted with the report on the AIA’s website), nonresidential construction is likely to decline 11 percent in 2009, and 5 percent in 2010. Furthermore, while the commercial sector will be hit harder than the institutional sector, both can expect declines.

“As the U.S. economy has deteriorated in recent months, [the panel’s] projections for construction activity have been revised down sharply,” Kermit Baker, the AIA chief economist, wrote in the report. “Economic stimulus proposals to revive our economy have concentrated on infrastructure investment and other facility modernization programs. However, until the broader economy recovers, the nonresidential construction industry is unlikely to see any reversal in activity levels.”

More specifically, the panel expects commercial—office, retail, and hotel—construction to decline 25 to 35 percent over the next two years, industrial construction by 20 percent, and the institutional sector by a more modest 7 percent, of which healthcare is expected to fare best, declining only 5 percent.

The panel also compared the current recession to the three that preceded it, from 1980-1982, from 1989-1993, and from 2000-2004. Of those, Baker wrote: “In the early 1980s recession, activity had declined 8.6 percent three quarters into the downturn, while the early 1990s recession generated an 18 percent loss over a comparable period. However, the early 2000s recession generated only a 4.5 percent drop at this point.”

“If this recession plays out like previous ones, there still are significant declines ahead,” he added.

That dour prognosis was confirmed by many architects who responded to Archinect’s survey. According to the report, “Several thousand Archinect visitors offered themselves up for the pulse test and the diagnosis is, sadly, that many of the survey respondents are barely alive.”

The responses are broken down by principals/owners, employed architects, unemployed architects, and students, and can be filtered by location and other criteria. Though they are the best off, even working architects expressed fear and frustration over the current recession. As one person put it, everyone is affected, “large firms, small firms, new firms, established firms, different specialties, it doesn’t seem to matter.” Archinect found that this had led to a bevy of solutions, from cost-cutting (bagels, paper clips) to new marketing campaigns, from taking on and even chasing previously unthinkable projects to diversifying into web and graphics work.

Indeed, despite the climate of extreme caution, Archinect and even many of its readers see the recession as an opportunity to improve and refocus work individually and firm-wide. As one person wrote, “Change can be good. Stay positive.”

That may be harder for the architects who have lost their jobs and students who have yet to enter the field—one complained about applying for 60 positions, receiving one phone interview, and not even getting that job.

But do not lose all hope. As the AIA report concludes, there is always the Obama administration’s much-ballyhooed infrastructure stimulus plan. On that front, the AIA released its recommendations for the stimulus plan yesterday, part of its Rebuild & Renew program. Beyond the road-and-rail stimulus that has been making the rounds, the AIA calls for $725 million to green and modernize the nation’s schools; $30 billion for green upgrades to buildings nationwide; $12 billion to encourage transit-oriented development; $30 million dollars for the Save America’s Treasures historic preservation program; and other initiatives. You can find more details on the recommendations here.