Ned Cramer, Editor in Chief

Ned Cramer, Editor in Chief

Everybody's talking recession. As this issue of ARCHITECT went to press in late January, economists for financial giants like Merrill Lynch and Goldman Sachs were shifting their predictions from gloom to doom, the Asian and European stock markets had dipped 20 percent in reaction to the U.S. subprime crisis, and the usually bullish White House was working with Congress on a $150 billion economic stimulus plan.

Ready to join in the panic?

Stop. Take a deep breath. Remind yourself that recessions are a natural part of the capitalist life cycle. They're just the economy's way of healing itself after a particularly aggressive growth period, like the burn you feel after a hard workout. Eventually the burn goes away, and your muscles rebuild themselves, stronger than ever. Recessions, for their part, last on average between six and 24 months, and, in that amount of time, there's no reason for a well-managed architecture practice (and its employees) to suffer.

The profession's learned a lot since the recession of the late 1980s and early 1990s, when giant firms laid off people by the hundreds. For one thing, large and small practices today are alive to the benefits of a diversified portfolio. The strategy is practically a business-world cliché at this point, but it seems to work. In the coming months, the going will get toughest for firms that haven't diversified—particularly, given the subprime situation, those that specialize in single- and multifamily housing.

Fortunately, it's never too late to diversify, and the opportunities are obvious. The AIA's newly released 2008 Consensus Construction Forecast predicts modest growth this year in the hotel, office, and institutional sectors. Moreover, in December the institute's monthly Billings Index posted its 34th consecutive positive score. “As the country braces for a possible recession in 2008, there will likely be an easing in demand for design services,” AIA chief economist Kermit Baker said in an accompanying statement. “While that is a natural reaction, it is important to note that with positive conditions for architecture billings going back over two years, nonresidential construction is expected to [be] one of the sources of strength in an otherwise uneven economy.”

So if your best condo-developer client goes bust, try leveraging your expertise into a bid for a college dorm. But remember that diversifying doesn't have to mean stretching yourself into unfamiliar territory. In the past decade or so, leading firms have developed services and products that fall outside the strict definition of an architect's role but well within their own comfort zones. You can do the same. Turn your experience designing sustainable buildings into a green consultancy (William McDonough + Partners), license that product you designed in the 1980s to a manufacturer or retailer (Michael Graves & Associates), or convince your corporate client that they don't just need new office space, they also need you to develop an entirely new brand identity for them (Gensler).

Layoffs may be inevitable. In fact, they may prove beneficial as a way of streamlining an oversized office (see “You're Fired!,” page 39, for tips on how to let someone go without getting burned by a lawsuit). But before anybody whips out the ax, it's worth exploring other ways to cut payroll expenses. I bet most employees would rather lose their 401(k) match than their jobs. If salary increases look impossible, try offering MBO (management by objectives) bonuses, linked to specific financial goals. It doesn't have to cost a fortune to keep the talent happy, and the last thing a hungry firm can afford to lose is valuable people. Calling for pizza while the staff's on charrette, or taking them on a field trip when it's over, will go a long way toward boosting morale.

In the end, the trick is to keep your head—to make decisions and take actions that will not only help your firm survive but keep it in good shape, pumped for the boom to come.

Editor in Chief