Top Regional Designers See An Upswing in Commercial Work
Regional design firms are decidedly more upbeat than in previous years. They report an upswing in several markets, most notably multifamily, mixed-use, offices, energy and some public-works sectors. Big concerns include the decline in funding for institutional work, finding enough qualified people to do the work and ongoing uncertainty about the long-term health of the economy.
However, many regional design firm leaders think the local economies in Salt Lake City, Boise and Denver will continue to improve and remain stronger than in most urban areas around the country.
"Investments in public infrastructure continue to be steady in Colorado and Wyoming, which is helping to support engineering design firms like ours," says Mark Lichtwardt, vice president and general manager of the Denver regional office for engineering firm Burns & McDonnell. "Unlike many sectors of the country, most communities in our region are continuing to invest in reliable water systems and transportation infrastructure."
Lichtwardt says his firm remains "in a growth mode" and with that comes concerns about the continuing search for experienced, qualified people. "New graduates are leaving engineering schools with four or five attractive job offers, so that tells you there is more demand than supply now," he says. "We're able to hire our share of great people, but we compete against many excellent firms in our area, so the search for the right people never stops."
Jim Bershof, principal at Denver's OZ Architecture, agrees. OZ is seeing strength in the multifamily and hospitality sectors with some resurgence in the market for speculative office buildings. "The commercial sector is also showing a good recovery, but our biggest worry right now is finding talented people to hire," he says. "We're also focused on keeping a healthy workload on board for our staff. It's one of those recurring balance issues: We need more good people, but we hire for the long run so we want to be sure we can keep them busy."
Large engineering firms topped the list of designers again this year. HDR reported another year of solid earnings due in part to the firm's lead design work on the innovative Spaceport Colorado project, which will operate space-flight and micro-satellite launches out of the Front Range Airport east of Denver.
"We believe Spaceport Colorado can have a significant impact not only in Colorado and the region, but it can become a global hub for the commercial space transportation industry," says HDR project director Michael Miller. Initial feasibility studies for the fast-track project are slated for completion by the end of this year.
Despite a number of innovative regional projects like Spaceport, many firms worry that the financial markets may not be able to sustain the current growth. "We are seeing a modest improvement in both the industrial-warehouse sector and, somewhat remarkably, the office-building sector," says Kevin B. Miller, president and CEO of GSBS Architects, Salt Lake City. "But [we are concerned about] maintaining the human and intellectual capital of our staff in the face of continued financial uncertainty, hyper-competitive fee structures and bargain-basement construction values."
Salt Lake City's Horrocks Engineers predicts ongoing strength in the region's transportation industry and even some improvement in site and land development. "But our greatest concern is always maintaining work for our size of company," says Sandi Lampshire, a principal and the firm's communications manager. "We have more than 230 employees in 15 different disciplines with an average growth rate of 10% each year."
"High-end retailers continue to expand and vacancies are down, so renovations are up," says Kent A. Hanway, president of Boise architectural firm CSHQA. "Changes in ownership are providing new work throughout the regions we serve. But market uncertainty is still a big factor. If or when interest rates start to change, I think we'll see a lot of volatility."
Brit Probst, a principal with Denver's Davis Partnership Architects, says his firm "has benefitted from a strong health care sector and favorable growth in the multifamily rental sector," but he shares others' concerns about the economic recovery. "The general state of the economy continues to be the primary issue that poses the greatest concern for the design industry today," Probst says. "The strength and length of employment growth, which is a good indicator of economic recovery, is still relatively weak."
Jeff Davis, principal at Architectural Nexus in Salt Lake City, says that his firm is seeing improvement in the office and retail arenas but continues to see "projects in institutional sectors remain in planning and continually pushing back their start dates for design and construction."
"Great architecture comes from great clients, and in an uncertain economy with a slow recovery, one of our greatest concerns is our clients' confidence in the economy," Davis adds. "That makes it difficult for them to bring their projects to fruition."