Industry hit hard by recession ARCHITECTURAL SHAKEOUT

March 30, 1992|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

When he left college in 1972 armed with an architecture degree, Jamie Snead thought he'd make a few bucks painting houses before getting on with his life. Little did he know that 20 years later he'd be flung back to about where he started.

"I made more money painting houses in 1972 than I'll make as an architect in 1992," Mr. Snead said. "Architects are getting killed."

That's the way architecture is these days. In fact, Mr. Snead is one of the luckier architects around: About 40 percent of Maryland's architects don't have a job within their field, meaning that architecture may be the profession hit the hardest by a recession that slammed commercial development to a virtual halt.

In 1991, the fountainhead flooded all over architecture firms, from small fry like Ziger, Hoopes & Snead, the eight-employee shop where Mr. Snead is a partner, to firms like RTKL Associates Inc. which laid off 28 percent of its 670 workers last year. From big layoffs to fierce fee-cutting that Mr. Snead predicts will trigger shoddy work and thus years of lawsuits, the year was Ayn Rand's revenge reverie come to life.

An estimated 1,000 of the 2,500 architecture jobs in the state vanished between 1989 and 1991, according to the Maryland Society of the American Institute of Architects. And few of them will be back soon.

"Probably no more than 20 percent," said RTKL Chairman Harold L. Adams. "I think we've been through a unique time and I don't think we'll see a return. . . . The 1980s were a consequence of a whole series of events. There was a lot of money being thrown at real estate. Not all of it was abusive -- not all of it was as bad as the public has been led to believe -- but there will be a lot of empty buildings out there for a long time."

How could this happen? Why are architects bearing the brunt of the recession? Where are the laid-off architects going? And what are architecture firms going to do to survive, let alone grow?

*

Steve Ziger and Harold Adams had seen the signs for a while, but each remembers when he really knew the 1980s party was over.

Mr. Ziger, whose firm, Ziger, Hoopes & Snead, is above an art gallery in Mount Vernon, saw his epiphany in the collapse of a real estate deal on Charles Street. Another local architecture firm was involved in a bid to build retail space across from the Brass Elephant restaurant.

"I think they had 70 percent pre-leasing, and they had a verbal commitment from the bank," said Mr. Ziger, a youthful-looking former RTKL architect. "They took down the existing building and [then] the bank said no, we want 90 percent. There's parking there now.

"Everyone looked around and said, 'Oh my God.' "

For the globe-trotting Mr. Adams of RTKL, the sign was the near-collapse of Federated Department Stores Inc., a longtime contact, after a hostile takeover by Canadian developer Robert Campeau.

"One of the engines of RTKL has been retail, mixed-use, and that started sputtering when Campeau drove Federated into the ground," Mr. Adams said. "People [at Federated] who had given us 35-40 jobs over the years were calling us looking for leads for jobs."

RTKL had grown to 670 employees from just over 200 in the early 1980s. But by June 1990, the firm decided to plan for the worst -- a 50 percent cut in its commercial design business.

"And it happened," Mr. Adams said. RTKL's revenues fell 25 percent in 1991 and the firm lost money for the first time in decades. (It expects a profit this year.)

RTKL has refocused on design work for institutions such as hospitals. It has pushed harder to get work in Indonesia, Mexico, the Middle East and other areas less affected by a U.S. recession. And it is hoping to cash in on the federal government's wave of office consolidations. One example: RTKL doing design work for a development team bidding to build the new U.S. Health Care Financing Administration headquarters.

Such diversity softened the recession's impact.

Still, RTKL closed its Florida office, laid off about 200 people, including about a half-dozen of the firm's 32 principals, scaled back contributions to the 401(k) program and other employee benefits and virtually halted capital investment.

One cost cut RTKL has not made: breaking its lease commitment at Commerce Place, the new 450,000-square-foot downtown office building. RTKL is slated to lease 100,000 square feet when the building is finished later this year.

Across town, the partners at Ziger, Hoopes & Snead were looking at the same problems, on a smaller scale. Commercial work used to be 40 percent of their business, Mr. Ziger said -- now it's about 10 percent.

As revenues fell 40 percent, architects at the Mount Vernon firm were put on a four-day workweek to minimize layoffs and to keep the creative team together until better times, said Mr. Ziger, who is partners with Craig Hoopes and Mr. Snead.

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