In 47 years as an architect, Carl McLarand has seen at least a half dozen economic downturns.
But the latest recession was the worst his industry has weathered, according to the founder and chairman of Irvine-based McLarand, Vasquez, Emsiek & Partners, the county’s third-largest architectural firm by yearly billings.
“I bet the unemployment rate for architects in Southern California exceeds 50%,” said the 71-year-old McLarand with a noticeable strain in his voice.
McLarand Vasquez’s billings fell 22% from a year earlier to $35.7 million for the 12 months through June. It saw a 44% drop to 70 workers for the same period. Architects were down 22% to 25 people.
But now the firm is hiring again, thanks in large part to recently landed work in China. Since January, it has won more than a half dozen different projects in mainland China.
“We’ve probably hired more than 20 people over the past month or so,” McLarand said. “And we’re still looking to add talented people to help with the increased workload we’re seeing now.”
The firm also is starting to see recovery in niche U.S. projects, according to McLarand.
“Over the years, we’ve placed a lot of emphasis on diversifying our practice,” he said. “That has helped us a great deal during this latest downturn.”
In the last major downturn, in the early 1990s, McLarand Vasquez expanded to outside markets, such as Thailand and Las Vegas.
“We kept looking for places doing significant amounts of construction,” McLarand said. “That’s what got us through that particular period.”
China Now
This time around, it’s China.
By the end of this year, billings for projects in China could account for as much as a quarter of the firm’s business, according to McLarand.
Last year, McLarand Vasquez had no business in China.
“In China, we’re working on five-star hotels, multistory shopping malls, exhibition halls and scientific buildings along with large office campuses,” McLarand said. “It has become a major area of our growth and offers significant potential to work on upscale projects in the future.”
McLarand started traveling to China last fall. That led to discussions with a large developer to handle part of a 3 million-square-foot masterplanned office project, he said.
Work started in January on overall designs with plans for 1 million square feet of office space getting under way shortly afterward, according to McLarand.
The firm hopes the office design work will lead to more business with plans for stores and homes nearby, he said.
Things move fast in China. After first meeting with the developer, it took less than a week to sign contracts and start work, McLarand said.
Developers in China expect a quick start after making a decision, he said. Contracts there tend to be much more simple and straightforward, according to McLarand.
“When you work on a project in China, you’ve got to understand that they’re committed to that project on a 24/7 basis,” he said. “They let you know what’s expected in terms of quality of design and service. They are very driven and have an incredible work ethic.”
Earlier this month, McLarand began an extended trip to China, leading a team of seven architects on a series of projects. One of those is a 600,000-square-foot office complex in Beijing, according to McLarand.
No Tourist Time
When he goes to China, McLarand said he doesn’t get a lot of time to play tourist.
“I’m in meetings day and night,” he said with a laugh. “I remember being informed before the start of one of our first meetings that we only had 20 to 25 minutes to make a presentation. We then proceeded to a lunch in a private dining room that lasted about two-and-a-half hours.”
His hosts already had done their homework and knew in detail about McLarand Vasquez’s work, according to McLarand. What they really wanted to do was get to know him better and find out how efficiently his firm could work.
“By the end of the lunch, we had our arms around each other making toasts,” McLarand said. “The relationship had been made.”
McLarand Vasquez also is seeing signs of recovery in U.S. projects.
“Since January, we’ve started to see movement on several fronts with well-funded, well-capitalized development companies,” said Rick Emsiek, a partner at the firm. “They’re making plans to proceed with projects.”
The firm has started work again on a housing development in Los Angeles that will include some 3,000 new homes. It also learned in February that several large office and retail projects that were stalled are getting a green light.
In some cases, better off developers are stepping in and buying stalled projects from distressed rivals and banks, according to Emsiek.
“Until we have banks loosening up on credit and more job growth, domestically it’s still early in the recovery process from our point of view as architects,” Emsiek said. “But we’ve been seeing some movement since the start of the year and we’ve indentified some real growth opportunities.”
