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Cover Story - October 2008

2008 Top Design Firms

Planning ahead, operating in diverse markets and staying within core markets is one of the examples cited by design firm executives as key to remaining financial stable and sound.

By Joe Florkowski

As the economy in the state and across the nation continues to stagnate, California’s design firms have taken different steps to weather the downturn and remain strong.

2008 Top Design Firms

California Construction interviewed three design firms across the state to get their take on how they are managing the sluggish economy, what project areas remain stable and how their relationships with owners are affected by the financial woes.

Planning ahead, operating in diverse markets and staying within core markets is one of the examples cited by design firm executives as key to remaining financial stable and sound.

For instance, Los Angeles-based RBB, Inc. has relied on its healthcare and institutional design work to remain strong despite the slumping economy, says Joseph Balbona, CEO.

“Healthcare marches to a different drum,” Balbona says. “It is very resilient to recession.”

RBB wants to become more geographically diverse, rather than market segment diverse, Balbona says. The company does not want to move into designing projects in markets that are seen as more risky, such as retail, but is planning to do more design work across the Western U.S., he says.

Other firms have decided to focus on design work that is less tied to residential construction and expected to remain more stable in the months ahead.

2008 Top Design Firms

For example, Greg Tonello, COO, with Roseville-based Williams + Paddon Partners says his firm anticipated that retail and community clubhouse construction tied to residential building has shrunk. Williams + Paddon instead focused more on government and school work while the firm waits for residential markets to rebound, he says.

At Irvine-based KTGY Group, Inc. CEO Tricia Esser says the firm has remained on solid footing by relying on a diverse group of trusted clients. KTGY is selective about who the firm will work with, she says.

“One of the things we do to protect ourselves is we really understand who are clients are,” Esser says.

As owners look to manage costs and get the most value from their projects, they are embracing green building techniques but have not taken up using BIM yet, the design firm executives says.

More owners are looking toward sustainability and the life cycle of the building, rather than looking to cut costs, Tonello says.

Owners are considering alternative materials to reduce costs and the more sophisticated ones are looking at material that requires little or no maintenance over the life of the building, Balbona says.

The owners are also becoming more cautious about building and shifting to more design-build projects when they can, he says.

Clients can’t build the way they did before and part of the challenge for architects is to help these owners find ways, says Esser with KTGY.

“You’re forced to look at ways to build the same apartment or house for less,” Esser says.

2008 Top Design Firms

At the same time, design firms also have to provide a service for owners and learn about the many new green building materials coming into the market, she says.

“There are so many things coming out that weren’t there five years ago,” Esser says. “A lot of these products aren’t tried and tested yet.”

BIM is still an unknown to many owners – especially in the wake of rising costs and a sluggish economy, the executives say.

Balbona says his firm was working on a project and wanted to use BIM, but couldn’t because of the upfront costs. The owner would have had to bring in subcontractors early on in the project and pay for those services and did not want to do that, he says.

Owners are becoming savvier about BIM and requesting its use, but Williams + Paddon mostly only uses BIM for in-house design and energy analysis, he says.

“There is still a lot of education that needs to go on with owners,” Tonello says.

While residential construction has been cited as one of the main reasons for the economy’s slump, the design executives say that the residential market will be one of the first to turn around.

“I don’t think it’s going to take much for single-family to come back because it’s so dead,” Esser says.

Now is the time for design firms to start looking at different designs and ways to improve the single-family home during this slump, she says.
“That’s what we are working on now – we are trying to do something different.”

Tonello also believes that residential will come back – and with that other markets such as retail will follow.

“Developers involved in retail need to feel comfortable before they stick their necks out,” he says.

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