In the Western U.S., Architects Hit Hard by Recession
When Mark Baker started his small Albuquerque, New Mexico, firm, Baker Architecture + Design, in 2002, he focused on small-scale projects: home additions, kitchen remodels, garages, and the like. In more recent years, Baker’s work has grown to include restaurants, spas, high-end custom homes, and elementary schools for Albuquerque’s public school system. Then the recession hit. “We had three big projects canceled at the same time,” Baker says. “February was horrible. We didn’t have any jobs that month.”
Baker and his two full-time employees went to a four-day work week, and when projects started trickling back in, they were the kinds of jobs Baker thought he had moved away from: mostly home additions and garages. “We’re doing jobs we’re overqualified for,” Baker says. “But it’s nice to have a job of any kind.”
Baker’s story is typical. Architecture firms in the western United States have been hit hard by the financial crisis. Work has dried up, and many firms have responded by layoffs and other cost-cutting measures. Commercial work, in particular, has fallen off dramatically, so firms are turning to public sector projects to stay afloat. In March, the Architectural Billings Index for the West was 36.1, down from February’s score of 37.4, but still higher than November’s all-time low of 34.9. (A score above 50 on the index indicates an increase in billings; below 50, a decrease.)
“What we’re going through is nothing short of brutal,” says Herbert Nadel, FAIA, chairman and CEO of Los Angeles-based firm Nadel. “It’s far and away the worst I’ve seen in my 48 years in the business.”
In 2007, Nadel had 260 employees in seven offices in California, Nevada, and Arizona, and the firm ranked No. 70 on Architectural Record’s list of the Top 150 Architecture Firms. The bulk of its work was retail and residential, two sectors that have seen dramatic declines throughout much of the West. With new construction at a standstill, Nadel closed its Ontario, California office and laid off nearly half of its staff. “And we may have to reduce even more,” Nadel says. Salaries of remaining employees have been reduced by 20 percent, and all bonuses, profit-sharing, and retirement contributions have been eliminated. “We’re in survival mode,” Nadel says.
A thousand miles to the north, in Seattle, global giant NBBJ has reduced its local staff by 30 positions, to 386; companywide, the firm has eliminated 7.5 percent of its workforce and now has about 680 employees. Managing partner Scott Wyatt, FAIA, says a number of the firm’s projects were simply put on hold—instead of being canceled outright—when the economy tanked. In January, NBBJ was in the process of designing three new office buildings for Microsoft’s Redmond, Washington, campus when the software company announced a series of cost-cutting measures. The Redmond buildings were postponed.
“It’s really hard to have a project put on hold through an afternoon phone call and suddenly have 30 people with nothing to do,” Wyatt says.
In Denver, OZ Architecture has laid off about a third of its employees, leaving a staff of about 150. Professional development has been curtailed, and hours for some employees have been reduced. RNL Design has gone from about 180 employees a year ago to the current 138. For both firms, the biggest drop has been in the commercial sector. “The commercial mixed-use market is pretty much gone,” says Michael Brendle, FAIA, RNL’s director of design. The firm has found a “safe haven” in government projects, including buildings on military bases around the country and maintenance facilities for bus and light-rail systems. “Those are the kinds of things that are getting funding,” Brendle says.
OZ, too, is focusing more on public-sector projects, such as libraries and schools. “The size of job we will consider has definitely gotten smaller,” says managing principal Jim Bershof, AIA. “But we’re definitely happy to have some of those projects.”
One western firm that hasn’t had to lay off any employees is Seattle’s Olson Sundberg Kundig Allen Architects, winner of the 2009 AIA Architecture Firm Award. With 85 employees, the firm specializes in museums and high-end homes, often built for art collectors. More than half of its work is in the Seattle area, but the firm has done projects throughout the United States and around the world. “If we didn’t have any foreign projects, we’d be in trouble,” says principal Jim Olson, FAIA. And while the firm has seen about 10 projects canceled in the last six months, enough new projects have come along to keep everyone busy. And in the current economy, no net loss is about the best one can hope for.
“Last fall,” Olson says, “we were really, really worried. But now we’re cautiously optimistic. I think we’ll be OK. We’re just taking it one month at a time.”
Look for future coverage of business conditions in other U.S. regions. Also, for more economic news, visit our Recession and Recovery special section.