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Cover Story - October 2009

Top Design Firms

Design firms say they had a good 2008. But with the recession in full swing in 2009, those same design firms are making more cautious plans while refocusing on quality and their strengths

By Joe Florkowski

It’s important to note that the 2009 Top Design Firms ranking for California Construction tracks 2008 revenue for design firms doing business in the state.

No. 5 Gensler is designing the renovation of SanFrancisco International Airport’s Terminal 2.
No. 5 Gensler is designing the renovation of SanFrancisco International Airport’s Terminal 2.

Because while 2008 revenues for most firms were stable and solid compared with previous years, revenue figures for 2009 and 2010 – due to the recession – are expected to be less certain for design firms.

To weather the shift in the economy, the architects and designers interviewed for this story are becoming more cautious, recommitting to quality and focusing on their strengths.

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Like others in the construction field, design firms are finding increased competition for projects. Where once only a handful of firms pursued a project, now dozens are competing for the same work.

But the competitive marketplace has spurred firms such as Santa Monica-based WWCOT to be more selective about which projects the firm pursues, says Adrian Cohen, FAIA, partner.

“We now go after fewer projects, but projects we believe we have a chance of getting,” Cohen says.

Pursuing fewer projects also means developing relationships with clients WWCOT has worked with before, he adds.

“If you do not have pre-existing relationships with clients, it’s very difficult,” Cohen says.

One of the biggest challenges facing design firms is that many owners – both private and public – are not currently funding projects.

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  • 2009 Top Design Firms
  • “It’s not like our clients don’t have money – they just don’t know whether they should spend it or not,” Cohen says.

    State officials, managing billion-dollar budget shortfalls, have also limited or delayed construction projects throughout the state.

    HMC Architects designed Hillcrest High School in Riverside.
    HMC Architects designed Hillcrest High School in Riverside.

    Working with the state presents another obstacle for the construction industry, says Robert Ludden, principal/COO of San Francisco-based KMD Architects.

    “The challenge for California is where are you are going to spend the limited funds you have – how you are going to prioritize,” Ludden says.

    Sacramento-based Lionakis has had a project delayed because of the state’s budget issues, says Matthew Shigihara, AIA, principal.

    “We don’t know when it’s coming out,” Shigihara says.

    As work dries up and design firms begin to watch their costs, architects say service and vision become even more important.

    Adrian Cohen
    Adrian Cohen

    Although NTD Architecture has had to eliminate some positions and watch operating costs since the recession began, the firm is not planning to move into new waters, says Jon Baker, FAIA, partner with NTD.

    “We are not going to move into areas where we can’t bring the expertise our clients expect from us,” Baker says. “We are continuing to focus on our market areas.”

    Weighing the demands of service and steady work versus the vision and the brand of a design firm is something that the industry will encounter as the recession continues, according to Ludden with KMD.

    Rather than just serving their clients and seeking work, firms will have to weigh whether the type of work they are doing is beneficial to the firm’s long-term vision, he says.

    Jon Baker
    Jon Baker

    “If you start chasing smaller and smaller projects, are you eroding your brand?” Ludden says. “How do you retain your vision and brand?”

    While some firms are choosing to downsize and cut marketing costs during this recession, others are spending more on outreach efforts.

    WWCOT has invested more in marketing efforts and its partners attend more events to talk about the firm, Cohen says.

    “We are spending more on marketing than we were a few years ago,” he says.

    While some firms have made layoffs, some firms such as Lionakis are looking to hire experienced staff, Shigihara says.

    Matthew Shigihara
    Matthew Shigihara

    “We’re not backing off the gas pedal,” he says.

    Looking ahead, growth will come slowly, according to some architects.

    Cohen with WWCOT believes that in the next six months, economic growth for the construction industry will be slow but gradual, followed by a boom.

    With construction costs as low as they are, the time is right, he says.

    “If I needed a building, why wouldn’t I do it now?” Cohen says.

    Others are less sunny in their outlook.

    Robert Ludden
    Robert Ludden

    “I’m pessimistic about a turnaround before the second quarter of 2010,” says Ludden with KMD.

    And Baker with NTD says he believes that the next six months of the recession will be the most difficult for companies as their backlog of work dries up.

    But the recession may have a silver lining. The recession has forced companies to look internally at policies, practices and procedures.

    “Philosophically, as difficult as these times are, this is a normal cycle,” he says. “When things are too good, we get lazy. We allow inefficiencies to creep into our organizations.”

     

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