Portland firms feel pinch of tightening economy

Daily Journal of Commerce (Portland, OR), Jun 26, 2008 by Sam Bennett

The most recent Architecture Billings Index shows demand for architecture services in the United States continues to slump, in tandem with a slowing economy caused by surging fuel prices, tightening credit conditions and the threat of inflation. The Portland market isn't immune from the downturn.

The billings index fell two points nationally in May, to 43.4, continuing its slide from 55 in December 2007. The American Institute of Architects releases the figures each month, and any score above 50 indicates an increase in billings.

"With the exception of the institutional sector - projects like government buildings, schools and hospitals - we've seen a dramatic contraction in design activity in recent months," said AIA Chief Economist Kermit Baker.

In the West, the ABI dipped from 50.5 in December to 36.5 in May. Nationwide, the billings for multifamily housing projects have shown the greatest decrease, from 51.2 in December to 36.8 in May. The ABI gives a nine- to 12-month glimpse into construction activity, excluding single-family homes.

Locally, firms said they are feeling the pressure of a weak economy. Architects said they are surviving by finding the best performing sectors, by looking for work outside the region and the country, and by capitalizing on their expertise in sustainable building designs.

"We're hitting the bottom right about now," said Kip Richardson, business development director at Ankrom Moisan Architects. "Housing has bottomed out and may start to come back. The condo market obviously tanked, but senior housing has accelerated."

Ankrom Moisan has 280 employees in Portland and Seattle. Since the beginning of the year, the firm has had to let go 20 employees due to the business slowdown. Ankrom Moisan had been on a "major growth curve" during the housing boom in recent years, adding 50 employees a year for three years. The firm stayed busy designing condo towers, but "we've clearly slowed down," Richardson said.

Clients who want expertise in sustainable design are turning to firms such as Ankrom Moisan, Richardson said. "That's really helping us as a firm."

At Sienna Architecture Co., which has about 100 employees in Portland and Seattle, the slowdown has meant minor cutbacks.

"We have reluctantly laid a few people off in both our Portland and Seattle offices, in response to our strategic repositioning," said Anthony Rimore, associate principal and director of business development. "There is no doubt in our business that things are slower than last year this time. However, eight months ago I lived in Atlanta, and I think Portland is much better positioned to weather this economic slowdown."

Rimore said the hospitality sector is still strong, and Sienna recently received a commission for the remodel of a hotel lobby in Seattle, as well as work for the U.S. Postal Service refurbishing and designing new post offices.

Office-space improvement is just one sector that is helping Group Mackenzie weather the slow economy, according to Jeff Reaves, the firm's president. As office buildings, such as Tom Moyer's Park Avenue West, are built, tenants are leaving older buildings. That creates work for Group Mackenzie, Reaves said. "People are backfilling space," he said.

Group Mackenzie is finding institutional work for clients such as Concordia University, as well as industrial work and public infrastructure work such as parks.

The firm offers an array of services, including architecture, landscape architecture, civil engineering, traffic engineering and interior design. "If we get one job, we get six jobs," said Reaves, referring to the involvement of all disciplines.

"We've always been strategic and we've always stayed out of the condo market," said Reaves. Medical office design is also a source of work for the firm.

About 40 percent of Group Mackenzie's work is out of state. Some clients, such as 24 Hour Fitness, provide work up and down the West Coast.

Sienna looks for jobs in areas such as China and Dubai, Rimore said. "The old saying is that when design and construction is slow, we plan," he said. "And this is very true. The master planning and urban design market sector is going gangbusters, especially in China and Dubai."

He said a slower economy has prompted the firm to pursue leads with more vigor than usual.

"We are much more aggressive in the tracking and pursuit of leads, and have a type of warrior persona," he said. "At the same time we are trying to be inclusive, teaming with other architects when possible. As much as we may tout how we can do everything - and we can - we are all in this together and we try very hard to team strategically when possible."