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Friday, September 25, 2009

Architecture firms getting fewer jobs look to health care and education

>http://www.nj.com/business/index.ssf/2009/09/architecture_firms_getting_few.html
By tanya Batallas

September 17, 2009, 7:00AM
The addition to the science center at Bergen Community College is still under construction.

With construction slowed to a crawl because of the recession, some architects are turning to other sectors less prone to economic swings to boost their fees.

"It's a very brutal economy for architects right now," said Ronald Schmidt, president and chief executive of Ronald Schmidt and Associates in Englewood. "It's horrific. The architect profession is hurting badly."

Nationwide, architecture firms' profits have slipped since the recession's official start in December 2007, as measured by the Architecture Billings Index produced by the American Institute of Architects.

The ABI declined 6 percent in July, compared with the same period in 2008. But that drop was much less severe than that month's decline of 21 percent from July 2007, and the index has shown a slowing falloff.

During the downturn, architectural firms found less work in residential and commercial sectors, but have seen more stability in the institutional area: schools, hospitals, religious and governmental buildings.

"They have been more stable than commercial construction but they still have gotten hard-hit, too," said Kermit Baker, the AIA's chief economist.

North Jersey architecture firms report much of same -- not so much strength, but at least less weakness.

For example, Schmidt's firm has been working on buildings at Bergen Community College, Hackensack University Medical Center and is designing a county juvenile detention facility in Teterboro.

"Anybody who's doing health care or education -- those are the areas that seem to be getting most of the" business lately," Schmidt said.


STIFF COMPETITION

Competition for those dollars is becoming fiercer, with firms not used to doing business in the area trying to make inroads, some local architecture firms also report.

Whereas fewer than 10 firms might bid on a project three years ago, these days there are often twice the number, said Fay William Logan, a managing principal of SNS Architects & Engineering in Montvale, which is completing work on the fifth floor of the business school at Ramapo College in Mahwah.

"Everybody in the world bids for anything," he said.

Increased competition has forced firms to slash fees. That means savings for school districts, hospitals and governments, but slimmer profit margins for architecture firms. Schmidt said his firm sometimes just breaks even.

It's also leading to fewer jobs. Unadjusted figures from the state Department of Labor and Workforce Development show that in July there were about 39,700 jobs in the category of architectural, enginering and related services -- down from about 41,700 in that field in July 2008.

While architects could count on a relatively stable flow of business from institutional clients, that reliability started to give way late last year, according to the ABI.


NO HELP FROM STIMULUS PROGRAMS

Firms also haven't seen much benefit from federal economic stimulus programs, said Baker, the architecture trade group's economist. He estimated that only about $20 billion in stimulus funds would flow to construction projects over the next couple years -- not enough, he said, to significantly boost the industry.

Only 15 percent of architecture firms surveyed by the AIA have worked on projects funded by the stimulus, Baker said.

"Most of the architecture firms are feeling almost no benefit from this," he said.

Meanwhile, school projects -- such as a new high school swimming pool in Lyndhurst and repairs and renovations at high schools in Demarest and Old Tappan -- have been keeping DMR Architects in Hasbrouck Heights busy, said president and chief executive Lloyd Rosenberg.

The Lyndhurst district has been approved for $550,000 in stimulus funds to offset costs of the project, said Joseph Abate Jr., the district's superintendent and business administrator.

Rosenberg anticipates benefiting from distress in commercial real estate. As some office buildings go through foreclosure, Rosenberg expects his firm will get a share of the work or renovate interiors to ready the buildings for leasing or sale.


Source:Architecture firms getting fewer jobs look to health care and education | New Jersey Business - - NJ.com


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