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Diversification key to architects' survival

Daily Journal of Commerce

January 3rd 2013

In the wake of the recession, many local architectural firms have had to expand the scope of their services to find new avenues of business in a shrinking marketplace. As the economy begins to recover, those efforts appear to be paying off - 2012 produced the strongest growth in the architecture industry in five years.

"The commercial office side ... has been still really slow, so we've had to look at other ways to grow and to diversify," said Rich Mitchell, managing principal of Group Mackenzie, one of Portland's largest architectural firms.

In 2008, Group Mackenzie had 156 employees. By the third quarter of 2009, it had a total of 89 in its offices in Portland, Seattle and Vancouver, Wash.

Business was dwindling for traditional projects such as suburban industrial ones, so the company had to refocus. It began concentrating on commercial redevelopment projects in the urban core, where an increasing number of residents and businesses were migrating.

"We've had to change how we go about projects, and being a firm that is 50 years old, we were part of that group - 30 years ago, even 20 years ago - where almost all of our work was in the suburban ring and further out," Mitchell said. "Today, that's not the case. It's much more balanced. A lot of our work is in the city and a lot of our work is going to be in the city."

The company's architectural billings grew 7 percent in 2011 and 20 percent in 2012. Projections are for 5 to 10 percent growth this year. Meanwhile, it now employs 139 people.

Group Mackenzie's story fits with national statistics. According to the American Institute of Architects, November was the strongest month for architectural billings growth since the end of 2007. The overall Architecture Billings Index was at 53.2 (any score over 50 indicates growth) - the fourth straight month of progress.

The index is an economic indicator of construction activity nine to 12 months down the road, so it stands to reason that builders could be busy next summer. Billings were strongest in the Midwest and Northeast regions; however, the Northwest also stands to benefit.

Kermit Baker, AIA's chief economist, said numerous Western markets overbuilt prior to the recession - like California, Nevada and Phoenix - are holding back the rest of the region with lackluster billings.

Chris Linn, a principal at Boora Architects, which employs approximately 68 people in Portland, is anticipating a 3.5 percent to 4 percent increase in billings this year, much from new multifamily projects on tap. Linn said the addition of out-of-state work and projects for Stanford University and Google helped the company weather the economic storm.

Diversification of roles and responsibilities has carried local architects through tough times, according to Brian Mares, an architect with Scott | Edwards Architecture.

"I think it's important for architects to remember that our skill sets are wide-ranging and have a place in many different sectors," he said.

Danny Drake, an associate with LRS Architects, noted that he has invested in technical aspects. He took a number of computer programming and business administration classes in college in addition to his architecture coursework.


"When projects started shrinking, a single skill-set staff member was no longer sustainable and was required to obtain multiple skills," he said. "This not only helped fill the gap of my architectural position, but provided me the skill to quickly adapt to a changing work environment."

Many professionals, however, were not able to adapt during the recession, said Jeff Myhre, president of Myhre Group Architects. As a result, some either had to take positions beneath their experience level, or were let go.

"Their past skills and positions circa 2007 are no longer in high demand," he said. "I've known numerous architects who have left the industry entirely, and numerous that have had to reinvent themselves within it. I've also hired numerous people in my own company who once held higher-level positions in other firms."

Myhre believes the trend will continue this year, because firms remain reluctant to create new positions.

Higher-level members will have to continue to serve multiple purposes, he said.

"This can be a demoralizing, frustrating and a very scary experience," Myhre said. "The trend in 2013 that many local architects will experience will be one of deep, personal introspection and self-awareness with regard to their overall career."

John Holmes, a principal at Holst Architecture, said 2012 was a record year for the company and that over the past 18 months it has doubled its number of employees from 12 to 24. It has transitioned from condominium projects to apartments, and increasingly focused on serving repeat national retail clients and institutions.