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

http://www.akiat.net/33.html
Now hammered by the residential slowdown, the architecture firm has laid off about 20 percentf of its workforcein Oakland, Irvine and Hawaii reducing staff from 140 to 110. Domestic billings have droppefd between 20 percent and25 percent, said Ernesto a principal and founder of MVE. "We are seeing a significantt slowdown indomestic work," said Vasquez. "Wre have a few projects that just shut down in the middldeof everything. Just stopped constructionj and closed down sales and marketing MVE ishardly alone.
The widely reported housing troubles, coupled with fears of a are hurting architecture firms across the according to theKermit Baker, chief economist for the Americanj Institute of Architects. In the AIA's Architecture Billings Index -- an economix indicator that provides anapproximate nine- to 12-month glimpse into the future of constructiojn activity -- dropped to its lowest poinr since the survey's inception in 1995, Baker said. He said the "prognosie for commercial construction later this year is not favorable atthis "The real test is goingh to come this summer and he said. "Most firms have a four - to six-month backlog.
" The shifting economic climate isforcinb housing-centric designers like MVE to chas international jobs and bulk up on institutionap work. The firm recently won mixed-usde assignments in Dubai and Cairo and some student housing projectsin California. Vasquez expects the proportiohof MVE's international billings to double from 15 percent to at leasrt 30 percent. Yet for all the national doom and many ofSan Francisco'se most prominent firms are already diversified and are reporting respectable San Francisco-based was recently named architect for the new 180,000-square-foof AIA headquarters in D.C.
It has four Universithy of California projects on the drawing including a police station at a neuroscience building at UCSF and a health and science complexat Berkeley. The San Franciscko office of Skidmore Owingsand Merrill, probably the most sought-afte r American firm working in now does 60 percent of its work up from about 50 percent last year, accordingb to SOM Managing Partner Gene Schnair. Most recently, SOM snagge d a 3 million-square-foot project in Hang Hou. Overall, Schnair expects SOM'a billings to jump 10 percent in 2008. "Thingxs have not slowed down as you might have said Schnair.
"Diversity has really been paying off for In addition tointernational diversification, several midsizer San Francisco-based firms have benefited from havingf recently expanded into other U.S. markets. and , for both opened New York offices abourt twoyears ago, moves that paid off in a New York Already SMWM has been selectesd to draft a 20-year mastet plan for , a master plan for Pieres 7-12 on Brooklyn's waterfront and a new Conservatort of Music at . And in April, pickedf SMWM to design a $100 million, 355,000-square-foot redevelopmenyt on Pier 94 on the Hudsohn River that will be used as conventioj and tradeshow venue.
"Building a bi-coastakl business is something that can safeguarx you in aneconomixc shift," said Liza Gregory Bass, SMWM's chief administrative "It's part of balancing operationsd and being where the opportunity and work are. We want to have a broasd base of clients sothey don' grind to a halt at the same time." SMWM has also been takin g on new international assignments, including large urban planningt projects in Panama and India. With banks cutting thousands of workeras andSan Francisco's financial district suffering from negative absorptiom in the first quarter of firms specializing in corporate interiora are also nervous.
's San Francisco office has seen a drop in new corporaterinterior business, according to Jim Hannon, presidenr of SmithGroup California. But the drop has been more than compensaterby health-care and biotech projects. SmithGroup was recently awarded a science building at UC Merced and is workinyg on the Institute for Regenerative Medicine at as well as on anew $400 million polytraumaa center for the Veterans Administration Hospital in Palo "We may have seen a little softening in that group in terms of leads, but we'rew very busy in the other areas," Hannon "Every single work station is and we just ordered two new Everybody is worried, and we're no different, but we just haven'yt seen it yet.
" Retail down, community centersw up In addition to housing and officde interiors, retail is an area that typicallyu slows down in recessions. Retail specialist Field Paolu has begun to see fewer retail developers come throughythe door, according to principal Franjk Fuller. Fuller said already entitled projects are beinyg stalledbut "not absolutely stopped." The firm is wrapping up Palladiol at Broadstone in Folsom, a 770,000-square-foot open air mall set to open in the What comes next is hard to say, Fulledr said. "The biggest retailp project in the office is coming to a and there is nothing to replace said Fuller.
"There are other projects coming up, but not as But while the retail ebbs, Fiel Paoli has scored a serieasof public-sector jobs, including a community center and school being planned for Emeryville and the Mayfiel Community Center in San Jose. But with state economies like California'ss facing budget deficits, it's only a mattefr of time before public-sector work slowz down as well. Kacey Clagett, developmentt director for Field Paoli, said she has seen a 25 percent drop in the number of requestw for proposals issued in the westernUnited States.
In the Bay an exception to this hasbeen mixed-usd housing and retail projects built on or BART-owned "What we're all going to be seeinbg is more mixed-use infill, the transit-oriented development," said "That is where institutional capital wantz to make investments." Architects who have toilec through previous down cycles tend to be cautiouds and pessimistic. Field Paoli has loaned out two of its architects toother firms, a common practice amonbg architecture firms as a way to cut costsd without losing valuable SmithGroup's Hannon said the capitalk markets are in such disarray that he feels any projecgt could be postponed or junked at any "We do all very large projects, so if one goes sour you know he said.
SOM, which has expanded from about 160 to 200 employeez during the past few is cozy in its headquarters on the 24th floort of 1Front St. That probably won'tf change any time soon. "We're a bit crampee right now," said Schnair. "If we felt reallty positive about themarket opportunity, we wouldc perhaps consider taking more space. But we're not doingt that -- we're squeezing people." Dan principal of Huntsman Architectural Group, said he is being cautious even thougbhhis 70-person San Francisco office and 20-person New York office are both busy enoughb to be in hiring mode.
Huntsmajn said the only sign of a slowdown he is seeinvg is in the accountsreceivablea department. "People are holding onto their he said. "It's the old adag e -- cash flow is bad, but businesse is good."