Recovery? What Recovery?
While the country’s economic future is looking a bit brighter, architects are still enduring the pains of a prolonged recession.
The overall economy may be experiencing the stirrings of a recovery, but the design industry is still reeling from the effects of a punishing and enduring downturn. Layoffs and closures continue to wrack the profession, while firms scramble for work and struggle to get paid for buildings already designed, according to a sampling of architects around the country.
Although there have been signs of stabilization in the past few months, including a slight uptick in the summer’s billing numbers, even designers who have jobs worry about their long-term prospects.
“I’m still pretty bearish on private development in the U.S. for a while,” says architect Scott Sarver, chief executive of Chicago’s De Stefano + Partners, which has shrunk by half in the last two years, to 75 employees from 150, while closing its Los Angeles office.
In part because the firm is getting paid late for completed projects, it’s been forced to cut salaries and reduce its work week to 32 hours. De Stefano is now trying save money by renegotiating its office lease, since it no longer needs 35,000 square feet, says Sarver.
But some firms have fared worse. In July, Lucien Lagrange, a condo-focused Chicago firm, filed for bankruptcy protection with up to $10 million in debts, according to reports. Lagrange at the time blamed the problem in part on a Saudi Arabian client who didn’t pay.
Meanwhile, recent firm closures include Cubellis in Boston, Yamasaki Associates in Detroit, Powell/Kleinschmidt in Chicago, Rink Design Partnership in Jacksonville, Florida, and Grad Associates in Newark, New Jersey, which was shuttered in February after 104 years.
Those freshly out-of-work architects are likely contributing to still-high unemployment numbers.
In the second quarter, which ended in June, the unemployment rate in the architecture and engineering sectors (the government doesn’t track architects alone) stood at 5.9 percent, according to the U.S. Bureau of Labor Statistics.
While that’s an improvement over the first quarter’s 7.2 percent figure—and is much better than the nation’s overall jobless rate of 9.6 percent—it still is high for an occupation whose unemployment rate is typically under 4 percent, says Abraham Mosisa, a bureau economist. “We’re not breaking out the Champagne just yet,” he says.
Plus, the bureau’s numbers typically skew heavily toward engineers, who were possibly in hiring mode on account of federal stimulus funds, other economists say. While the unemployment figures might not indicate it, many architects are still facing a profound lack of work, they add.
Other Grim Indicators
Other forward-looking indicators may be similarly troubling. Surveying assignments, which are a precursor to commercial development, are flat, analysts say. Indeed, until 2008 in Massachusetts, for example, surveyors usually had enough work to keep them busy for four months, says Abby Goodman, executive director of the Massachusetts Association of Land Surveyors and Civil Engineers. But now, the backlog is nil, she says.
Also, the Architecture Billings Index (ABI), compiled by the AIA, came in at 48.2 in August. Though that beats July’s 47.9 and June’s 46.0, the ABI has not cleared 50 since January 2008, and anything less than 50 suggests a contracting industry, according to Kermit Baker, the AIA’s chief economist. “Since last year things have gotten worse by whatever measure you use,” Baker says, though “things are getting worse at a much slower pace.”
While unemployment is a problem, underemployment—workers whose hours have been curtailed through furloughs or shortened weeks, like at De Stefano—is of equal concern, according to Rick Bell, executive director of New York’s AIA chapter.
Like at other chapters around the country, there are just as many people attending downturn-geared panels as a year ago, Bell says. In fact, New York’s “Not Business as Usual” lunches, which began with the recession in 2008, still draw about 50 people twice a month.
Similarly, the Los Angeles chapter offers a popular quarterly series to introduce architects to new fields, like video game or set design, says spokesman Will Wright. And in Chicago, to accommodate a surge in people now studying for licensing exams, the AIA center stays open all night twice a week, says Zurich Esposito, an executive vice president there. “It’s also become a bit of a networking thing,” he says.
Areas of Activity
While homes, corporate interiors, and retail projects may still be few and far between, not all is bleak. Oil and gas facilities are strong, according to architects in Oklahoma, where the energy industry is dominant. School projects in New Orleans that are tied to the reconstruction after Hurricanes Katrina and Rita, are plentiful, architects say, even if some housing construction has appeared to lag.
Hospitals are also reliable, says Hal Sibley, AIA, a principal of HMC Architects in Los Angeles, where the firm is designing the new Martin Luther King Jr. Hospital, which calls for a renovation plus construction of a new 140,000-square-foot wing. Overseas markets are even better, with HMC now taking on a 2,000-bed medical center in Shunde, China.
But the firm, which laid off 20 percent of its workforce from 2008 to 2009, or 100 of 500 people, is not entirely insulated, Sibley says. Because HMC’s hospital projects will wind down in the next few months, “2011 will be a little scary for us,” he admits.