New Report Digs into Aftermath of Recession
The Great Recession has hardly been good to architects. But the extent to which it fundamentally changed the industry was not always clear. Now comes a sweeping 40-page report released this month from the American Institute of Architects (AIA), the industry’s leading trade group, that specifically details the recession’s damage and what firms did to cope. And those survival strategies may portend new ways of doing business.
The bad news first: From 2008 to 2011, revenues fell to $26 billion from $44 billion, a 40 percent drop, according to The Business of Architecture: 2012 Survey Report on Firm Characteristics. Likewise, employment fell by 28 percent from 2007 to 2011, or by 60,800 jobs, according to the report, which is similar to one put out by the AIA every three years, though this is the first to consider the recession. It relies on both U.S. Department of Labor figures and survey responses from 2,800 firms.
Looked at more granularly, the data shows that many of those who were laid off appear not to be architects but support staff, like in human resources and technical support. And even in firms that have slowly begun to hire designers again, these support jobs are not always being filled. Unlike with support staff, firms can bill clients for the hours their architects work, making them that much more valuable, architects say.
Wimberly Allison Tong & Goo (WATG), a hotel-focused California architecture firm, saw its staff shrink from 500 in 2008 to 300 in 2010. It has 350 employees today. Though many of those cuts resulted from the closing of an Orlando office and relocation of a Seattle office to Singapore, WATG also condensed some departments, says principal Raj Chandnani, an 11-year veteran of the firm. To wit: The 67-year-old WATG decided that accountants weren’t needed in all six of its offices and consolidated them into a single six-person department at its Irvine headquarters, Chandnani explains.
To survive, firms have become far more multidisciplinary. WATG has a new standalone interior design studio in New York. Likewise, in 2010, Davis Brody Bond, which is known for its design of the National September 11 Memorial Museum (along with Aedas), bought a stake in Spacesmith, a 14-person interiors-focused firm that now shares Davis Brody’s office. “The generalist firms that we all strive to be are losing out” to a more specialized models, says David Williams, a Davis Brody Bond partner. “It’s unfortunate.” Still, that diversification has cushioned economic blows, Williams admitted. Davis Brody Bond didn’t experience its first round of layoffs until a year ago, when it lost eight people across its three offices, shrinking to 86, from 94.
The sluggish recession years also allowed for training time, particularly LEED accreditations, the AIA report shows. Indeed, in 2008, 35 percent of firms had LEED designers on staff. In 2011, 65 percent did. About 140 of the 180 employees of Cooper Carry, a 52-year-old Atlanta-based firm, are now LEED-certified, says Kevin Cantley, the company’s chief executive. The recession, which led to the shedding of nearly 40 percent of payroll, also provided an opportunity to learn how to use the modeling software Autodesk Revit, which is now deployed across the four-office practice. “We used the slow time to really transform the firm,” says Cantley.
And the investment may be paying off. 2012, like 2011, will be profitable for Cooper Carry, which designed a 1,100-room, $520 million Marriot Marquis that’s now rising in Washington, D.C. Other signs, like the fact that the AIA’s Architecture Billings Index stood at 50.2 in August, up from 48.7 in July, has Cantley thinking that the AIA’s next survey report three years from now won’t be as dour. “We see slow but pretty steady growth ahead,” he says.