One evening in March, on the eighth floor of a mid-rise office building in the well-heeled Itaim Bibi neighborhood of São Paulo, architects Anna Dietzsch and Joaquim Rondon tried to explain to a visiting reporter the essential differences between working in the United States and in Brazil. “Brazil is very bureaucratic,” said Dietzsch, a director at Davis Brody Bond Aedas. Born and raised in Brazil, Dietzsch studied at Harvard’s Graduate School of Design and now works primarily in New York, traveling to her hometown of São Paulo—and the firm’s satellite office, Davis Brody Bond Brasil (DBB Brasil)—every month or so.
Getting a business up and running in Brazil can take much longer than in the United States, Dietzsch said, and World Bank research confirms this: The average time required is 120 days (compared with six in the U.S.), according to the report Doing Business 2010, which ranks Brazil 129th out of 183 countries for ease of doing business. Even after following all the required procedures (16 of them, according to the World Bank), there can be other, minor headaches to contend with. For instance, when DBB Brasil’s office opened two and a half years ago, it was an ordeal just to get bottled water delivered without multiple people signing off, Dietzsch remembered with a laugh.
Then there’s the larger matter of how buildings actually get built. Shop drawings and trade schedules are uncommon in Brazil, if not unheard of, Dietzsch said. She recalled one of the first projects she worked on in her home country; at one meeting, she was the sole woman in a room with more than 15 men and struggled to find the correct Portuguese term for “shop drawings,” before realizing there probably wasn’t one. So architects must rely on off-the-shelf solutions, or customize their own, added Rondon, the managing director of DBB Brasil.
But as Dietzsch and Rondon flipped through project portfolios, it was easy to see why they could shrug off those red-tape battles. DBB Brasil, now a 10-person office, completed in 2008 a city-sponsored “eco park” in São Paulo, Victor Civita Plaza, which unspools a long diagonal of wood decking across, and 3 feet above, a contaminated post-industrial site that it seeks to remediate. The firm is currently at work on another urban intervention, Green Stream Linear Park, which intends to unify disparate spaces in a bohemian neighborhood—alleys, public steps, and a stream among them—into an integrated park, friendly to pedestrians and bicyclists. (The project is a collaboration between DBB Brasil, a local nonprofit, and the City of São Paulo’s environment department.)
Also on the boards—and on a vastly larger scale—is Bandeirantes, a 5.2-million-square-foot mixed-use development that will include 1,600 apartments and 1 million square feet of retail space. The architects have sought to balance the need for access and circulation (20,000 people will move through the site every day) with the creation of a welcoming, sustainable environment, and, finally, with security—a constant concern in this city of 11 million.
The rules of real estate in Brazilian cities are changing, Rondon said; development companies, which used to be small family businesses, now often have boards to answer to and face increased competition. So developers “are realizing that design is a differentiator,” he said. Dietzsch praised the city government of São Paulo for driving innovation, and said the city—sprawling, chaotic, and traffic-clogged—is attractive to architects precisely because there’s so much to be done. “São Paulo is like a big problem” to be solved, she said. What architect could resist that?
With a population of almost 200 million, Brazil has long been touted as a “country of the future”—for so long, in fact, that Brazilians joke about the tag. But an unusual confluence of good news in recent years does seem to justify its use. First, there’s the rate of economic growth: Brazil’s GDP grew by 5.7 percent in 2007 and by 5.1 percent in 2008, before contracting by a slight 0.2 percent in 2009. Here, the Great Recession was only a hiccup. Thanks to abundant commodities such as iron ore, timber, gold, grain, and coffee; massive oil reserves discovered in 2007; and a government that is supportive of free-market reforms, Brazil has become the world’s eighth-largest economy. Capping all this off is the country’s win of the world’s two premier sporting events, virtually back-to-back: the World Cup, to be hosted at locations around Brazil in 2014, and the 2016 Summer Olympics, which will take place in Rio de Janeiro.
Hosting the World Cup and Olympics in quick succession will be “an incredible boost for Brazil,” says Christopher Lee, a senior principal in the New York office of Populous, the global sports architecture firm. Populous has designed a World Cup stadium for the town of Natal in northeast Brazil, after working on two cities’ bids (the other one, for the city of Rio Branco, was unsuccessful). The fact that Populous became involved at that early stage—when 17 cities in Brazil each bid to host a game or a series of them—reveals something of the inside-track nature of the selection process. Every city selected its own architects and other consultants to help put together a bid, and they tended to seek out local firms and/or international experts in stadium design, like Populous.
The Natal project will replace a 1950s stadium with a new 45,000-seat soccer stadium built to exacting FIFA (Fédération Internationale de Football Association) standards. The design includes many sustainable technologies, a move strongly encouraged, Lee says, by the local authorities. “You work everywhere, and wherever you are, there’s some cursory nod: ‘It’s got to be sustainable.’ I’m certainly finding on Natal and other projects [in Brazil] that … sustainability seems to be something that’s supported on very high levels.”
On the same morning that he spoke with ARCHITECT, Lee learned that Populous’ application to become a registered architecture firm in Brazil, through CREA (a council of regional licensing boards), had been approved. The firm will likely establish an office in Rio de Janeiro and a side office in Natal. Setting up a Brazilian company and securing CREA registration was “quite a big hurdle,” he says, and required months of work, but will be worth it long-term: “This company believes there are great opportunities in Brazil, certainly for our world: sport and entertainment.” Populous is “positioning to see how we can assist on the Olympics,” Lee says; but even aside from that event, there are incredibly rich opportunities: Brazil has 80 soccer teams that regularly attract more than 25,000 spectators, Lee points out.
Because of the closed nature of the bid process as well as the highly specialized project type, World Cup and Olympics facilities are not, in fact, ripe for plucking by American design firms. Bernardo Fort-Brescia, principal of Miami-based Arquitectonica, says it matter-of-factly: “It’s not as much stadium work as people would think. It’s not as glamorous as people would think”—because many of the projects are refurbishments of existing stadiums. Arquitectonica has had a São Paulo office for five years and now employs about 40 people there, all of them Brazilian. Fort-Brescia sees more activity in the commercial sphere: hotels, office buildings, shopping centers. The firm just completed a 1-million-square-foot office building in São Paulo.
Brazil is flush with retail projects, which have proved a lifeline for at least one U.S. architecture firm. Beame Architectural Partnership, a 25-person practice in Coral Gables, Fla., has been working in Brazil for more than 15 years. In the beginning, remembers firm president Larry Beame, inflation was so high, “my colleagues down there would spend 30 percent of their time managing their money so it didn’t go away. Contracts would say, ‘Pay me Friday at noon.’?” But the hyperinflation of the early 1990s is a thing of the past, and now, with a number of office buildings and shopping centers to its name, Beame’s firm increasingly looks south for new work. A longstanding client is gearing up to do three projects, and Beame would like to break into the Brazilian hotel market. Even if that doesn’t happen, it beats the prospects stateside, he says: “The States is sad. Business is almost nonexistent.” Beame Architectural Partnership does all its work for Brazilian projects out of Coral Gables, taking projects through DD, then handing them off to a local architect. Not having a local office is a disadvantage, because Brazil levies a hefty tax—25 percent—on out-of-country payments for professional services. “We’re less competitive to begin with, because salaries are higher here,” Beame acknowledges, and then there’s the tax. So clients “really need to believe they’re getting some expertise and benefit they wouldn’t get from their local architect.”
“Clients are paying a premium to hire you; there’s no way around it,” agrees Mike Toolis, CEO of Chicago-based VOA Associates, which has a five-person satellite office, VOA/LB, in São Paulo. Toolis says that the office, focused on commercial projects, wouldn’t exist if VOA hadn’t had a connection to Brazil—a former employee, Marcos Bastos, was rehired by VOA to lead the Brazilian business.
Toolis is not so bullish on Brazil as many of his peers. Back in 2007, when the U.S. economy was on a tear, architects weren’t heading to Brazil the way they were flocking to Dubai and China, he notes. “Brazil has not been a fertile market for us,” he adds. “Most of the work Marcos has done there—he’s pretty much eating what he’s killed.”
For U.S.-based architecture firms that specialize in healthcare, expertise in American-style health delivery is the main selling point. Healthcare in Brazil is a mix of public and private options; there is a universal healthcare system that relies on government financing, but private care can be purchased through employers, or paid for out-of-pocket. As Brazil’s middle class grows, so does the demand for private medical services. The research and consulting firm Frost & Sullivan reports that Brazil’s healthcare market was worth $22.1 billion in 2009, a figure that is predicted to grow by 35 percent over the next three years.
Eduardo Egea and Tatiana Guimaraes have led the small São Paulo office of Dallas-based HKS since it opened in early 2009. Egea, a senior vice president at HKS and the firm’s director of healthcare for Latin America, says that Brazil started to pique his interest about five years ago. He had previously worked in Chile, and “things we saw in Chile 12 years ago, we started seeing them in Brazil.” Chief among these was “a new middle class that is demanding to have access to better quality. And that includes everything: better hotels, better hospitals, better office buildings, better residences.” And for HKS, strong in sports as well as healthcare, the World Cup and Olympics were a big draw. (Sure enough, HKS has become involved in planning for a proposed World Cup venue.)
Brazilian-born Guimaraes, an associate and senior medical architect at HKS (who is married to Egea, an American), trusts that her links to the Brazilian healthcare community will help grow the incipient business: Her father is the president of the Brazilian Society of Cardiology. Working in Brazil “is very much about who you know,” she says. “Not the fact that you’re Brazilian”—per se—“but the relationships you have, personally, can help.”
That’s one reason why the Brazilian offices of most U.S. design firms working here are led by Brazilians, and why they’re staffed predominantly—or entirely—by local architects. But the main reason for hiring locals is cost. “There is a difference in remuneration between the U.S. and here,” says Manoel Pereira, executive director of Kahn do Brasil, whose parent company is the Detroit-headquartered architecture firm Albert Kahn Associates. “We cannot afford to have regular foreign employees.”
Kahn do Brasil was established in 1998—initially, it served mostly to collect payments from Albert Kahn Associates’ first client in Brazil, Mercedes-Benz—and has since grown to a 26-person office with a deep portfolio of industrial and healthcare projects, many on behalf of São Paulo’s prestigious Hospital Israelita Albert Einstein.
Pereira is frank about some of the less-savory business practices he has encountered—and about the difficulty of staying competitive while avoiding them. Brazilian labor laws place a heavy burden on employers; companies must pay an amount equivalent to one month’s salary into every employee’s pension fund, every year, and if the company dismisses that employee, it must then match 40 percent of the total amount in that fund. Consequently, many architecture firms evade the laws by not formally employing their staff, hiring them as consultants instead.
Pereira estimates that 60 to 70 percent of Kahn’s competitors (mostly Brazilian firms) work this way, which gives them an advantage in terms of fees. They might also get kickbacks from manufacturers whose products they specify, another practice that Kahn eschews, Pereira says. (One reason why Kahn is “not growing as fast as we’d like to,” he notes.) But the competitors’ slippery ways also carry a risk: Companies that don’t abide by the laws can be reported to the government and fined, or sued. Kahn do Brasil puts a special notice in all its proposals, notifying clients that the company operates according to the employment laws of Brazil, says Clift Montague, chief strategic officer at the Albert Kahn Family of Companies.
Pereira says clients are starting to expect more scrupulous behavior on the part of the firms they work with, and he still expects Kahn do Brasil to grow over the next five to 10 years. This period of growth, he predicts, will be different from what preceded it. Brazilians’ attraction to American-style healthcare will no longer be the key driver: From here on out, thanks to Brazil’s economic juggernaut, it’ll be “just natural market growth.”