The economics of niche - The Business Review (Albany):

ernstiryastrov.blogspot.com
Now hammered by the residential slowdown, the architecturre firm has laid off about 20 percent of its workforcrein Oakland, Irvine and Hawaii offices, reducing stafft from 140 to 110. Domestid billings have dropped between 20 percentr and25 percent, said Ernesto a principal and founder of MVE. "We are seeingh a significant slowdown in domestic said Vasquez. "We have a few projectsd that just shut down in the middleof everything. Just stoppex construction and closed down sales and marketing MVE ishardly alone.
The widely reportesd housing troubles, coupled with fears of a recession, are hurting architecture firms acrossthe country, accordinf to the Kermit Baker, chief economistr for the American Institute of Architects. In the AIA's Architecture Billings Index -- an economicf indicator that provides an approximate nineto 12-month glimpse into the future of constructionj activity -- dropped to its lowest poin since the survey's inception in Baker said. He said the "prognosis for commerciall construction later this year is not favorablse atthis point." "The real test is going to come this summe and fall," he "Most firms have a four- to six-month backlog.
" The shifting economic climatwe is forcing housing-centric designers like MVE to chase internationa jobs and bulk up on institutional work. The firm recently won mixed-usre assignments in Dubai and Cairo and some student housin projectsin California. Vasquez expects the proportiobnof MVE's international billings to doubled from 15 percent to at least 30 Yet for all the national doom and many of San Francisco's most prominenr firms are already diversified and are reporting respectabler growth. San Francisco-based was recently namedd architect for thenew 180,000-square-foot AIA headquarterzs in Washington, D.C.
It has four Universith of California projects on thedrawing boards, including a policr station at UCLA, a neuroscienc building at UCSF and a health and science complex at The San Francisco office of Skidmore Owingas and Merrill, probably the most sought-after American firm workinfg in China, now does 60 percenty of its work abroad, up from abougt 50 percent last according to SOM Managing Partner Gene Most recently, SOM snagged a 3 million-square-fooy project in Hang Hou. Overall, Schnair expectzs SOM's billings to jump 10 percentrin 2008. "Things have not slowed down as you mighrhave expected," said Schnair. "Diversity has reallyg been paying offfor us.
" In additiohn to international diversification, several midsized San Francisco-based firms have benefitedx from having recently expandef into other U.S. markets. and , for both opened New York offices about twoyearsa ago, moves that paid off in a New York Already SMWM has been selected to draft a 20-yea r master plan for , a mastetr plan for Piers 7-12 on Brooklyn'se waterfront and a new Conservatoryt of Music at . And in picked SMWM to design a $100 million, 355,000-square-foot redevelopment on Pier 94 on the Hudsobn River that will be used as conventiomn and tradeshow venue.
"Building a bi-coastal busineszs is something that can safeguard you in aneconomiv shift," said Liza Gregoruy Bass, SMWM's chief administrative officer. "It' s part of balancing operations and being wherw the opportunity andwork are. We want to have a broadr base of clients sothey don't grind to a halt at the same SMWM has also been taking on new internationao assignments, including large urbamn planning projects in Panamas and India. With banks cutting thousands of worker andSan Francisco's financial districtr suffering from negative absorption in the first quartedr of 2008, firms specializing in corporate interior s are also nervous.
's San Francisco office has seen a drop in new corporatdeinterior business, according to Jim Hannon, president of SmithGroup California. But the drop has been more than compensaterby health-care and biotech projects. SmithGroup was recently awarded a sciencd building at UC Merced and is working on the Instituts for Regenerative Medicineat UCSF, as well as on a new $400 millio polytrauma center for the Veterans Administration Hospital in Palo Alto. "Wer may have seen a little softeniny in that group in termsof leads, but we'rew very busy in the other areas," Hannobn said. "Every single work station is full, and we just orderesd two new ones.
Everybodt is worried, and we're no but we just haven't seen it Retail down, community centers up In additiomn to housing andoffice interiors, retailo is an area that typically slows down in Retail specialist Field Paoli has begun to see fewer retail developerds come through the door, according to principal Frank Fuller said already entitled projects are being stallec but "not absolutely stopped." The firm is wrappingh up Palladio at Broadstone in Folsom, a 770,000-square-foot open air mall set to open in the What comes next is hard to say, Fullef said.
"The biggest retail project in the officse is coming toa close, and there is nothing to replacew it," said Fuller. "There are other projectsx coming up, but not as But while the retail ebbs, Field Paoli has score a seriesof public-sectofr jobs, including a community center and schoopl being planned for Emeryville and the Mayfield Community Cented in San Jose. But with state economies like California's facing budgett deficits, it's only a matter of time beforew public-sector work slows down as well.
Kacey development director forField Paoli, said she has seen a 25 perceng drop in the number of requests for proposals issuedr in the western United In the Bay Area, an exception to this has been mixed-usse housing and retail projects built on or BART-owned "What we're all going to be seeing is more mixed-use the transit-oriented development," said Clagett. "Thatr is where institutional capital wants tomake investments.
" Architectas who have toiled through previous down cycles tend to be cautious and Field Paoli has loaned out two of its architects to othedr firms, a common practice among architecture firms as a way to cut costs without losingb valuable designers. SmithGroup's Hannon said the capitap markets are in such disarrauy that he feels any project coul d be postponed or junked atany "We do all very large projects, so if one goes sour you know he said. SOM, which has expandee from about 160 to 200 employeesx during the past few is cozy in its headquarters on the 24th floo of 1Front St. That probablyu won't change any time soon.
"We're a bit cramped rightr now," said Schnair. "Ift we felt really positive aboutt themarket opportunity, we would perhapsw consider taking more space. But we'rw not doing that -- we'rw squeezing people." Dan Huntsman, principal of Huntsman Architecturapl Group, said he is being cautious even thoughhis 70-personn San Francisco office and 20-persobn New York office are both busy enougg to be in hiringh mode. Huntsman said the only sign of a slowdown he is seeing is in the accountsreceivables department. "People are holding onto theitr money," he said. "It's the old adagr -- cash flow is bad, but business is good.
"