Download the 2010 OC ARCHITECTURE FIRMS List (pdf)
Orange County’s architects aren’t seeing an economic recovery quite yet.
The top 30 firms here saw a $70 million drop in countywide billings in the 12 months through June, according to this week’s Business Journal list.
Industry officials aren’t expecting too much of a change in the year ahead.
“It’s a tough economy out there. It’s going to be a while before things (improve),” said Dan Heinfeld, president of Irvine’s LPA Inc., which took the top spot in this year’s list for the third year running.
For the second consecutive year, the top 30 architecture firms reported a significant drop in local billings, falling 16% to $364.8 million on this year’s list. The top 30 on 2009’s list saw a 9% drop from 2008’s tally to $442 million.
The two years of declining work for local architects followed six straight years of increases.
OC’s top 30 firms in the 12 months through June earned about as much as they did in 2005.
The drop in billings could actually be worse than reflected on the list. Half of the companies on this year’s list declined to disclose their billings and are Business Journal estimates.
During better times, as many as 29 of the 30 firms on this list provided billing figures.
Of the 16 companies that provided billings for the year, 10 reported declines of 10% or more. Seven of those reported drops of 20% or more. Five reported increases in work.
No. 1 LPA reported $43.8 million in billings, about a 13% decline from the same period in 2009—one of the smaller drops in business for firms that reported billing figures for the past year.
“It’s been surprising to us how deep, and how long (it’s taken) to get out of the recession,” Heinfeld said.
The drop in business led to a shedding of employees.
Firms on this year’s list reported a 7% drop in licensed architects working for them from a year earlier, and about a 6% decline in OC employees.
Again, the employee drops could be more severe than what’s being reported and estimated.
“I bet the unemployment rate for architects in Southern California exceeds 50%,” Carl McLarand, chairman of Irvine-based McLarand, Vasquez, Emsiek & Partners, told the Business Journal earlier this year.
Local firms are looking for new sources of business, which, in some cases, means going out of the country.
For MVE, which moved up one spot on this year’s list to No. 2 with an estimated $38 million in billings, a push into China has turned into a good source of business.
By the end of this year, billings for projects in China could account for as much as a quarter of the firm’s business, McLarand said in late April.
Last year, MVE had no business in China.
The company won more than a half dozen projects in mainland China in the first half of the year. It’s working on five-star hotels, multistory shopping malls, exhibition halls and scientific buildings along with large office campuses, McLarand said.
Others may soon follow suit.
“We all have to go where there’s work,” said LPA’s Heinfeld.
In the case of LPA, that means more of a focus on medical, civic and educational projects, although the lack of new projects on the horizon for California’s state-run colleges could dry up some of its education-related work.
It’s also been seeing a lot of architecture business related to tenant improvement work for businesses relocating offices—either because they’re downsizing to smaller spaces or because they can get better rents elsewhere, Heinfeld said.
Healthcare work helped Newport Beach’s Taylor make the largest jump up this year’s list—a five-spot increase to No. 5. The firm reported $17.4 million in billings, a nearly 7% increase from last year’s list.
Taylor’s been working on many of OC’s largest medical facility projects of late, including the recent tower addition to Fullerton’s St. Jude Medical Center, and Hoag Hospital’s renovation of its 244,000-square-foot facility in Irvine.
The good news for local architecture firms is that billings and interest from prospective clients is well above levels seen in early 2009, when the industry felt the brunt of the downturn, according to data from the American Institute of Architects. And recent readings appear to show that the industry is in largely the same spot as it was in late 2001, following the last recession.
The bad news is that firms in the Western U.S. in general have seen the weakest amount of recovery of any part of the country since that time, according to the AIA’s polling of its member firms.
Most architecture firms still are seeing a “continued decline in demand” for design services, and have recently seen a pullback in inquires for new projects, following a few months of improved interest, according to the latest data from the AIA.
“Business conditions at design firms remain quite volatile,” said AIA Chief Economist Kermit Baker, in a statement.
The institute continues to “receive a mixed bag of feedback on the condition of the design market from improving to flat to being paralyzed by uncertainty,” Baker said.
