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Friday, November 07, 2003 - Page updated at 12:00 A.M.

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Big architecture jobs dry up as firms scale back for survival

By Kristina Shevory
Seattle Times Eastside business reporter

THOMAS JAMES HURST / THE SEATTLE TIMES
Joseph Sanford, architect and owner of Westwind Design Group in Kent, has turned to doing remodels and taking on projects in California because his previous design work for millionaires has slowed down.
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Architect Joseph Sanford kept busy in the late 1990s designing custom-built homes for newly minted high-tech millionaires.

But that work came to an abrupt end in 2000 when the economy sank.

Struggling to support himself and his family, Sanford lived off the equity in his home and eventually found work designing home remodels and additions. The work wasn't enough to cover his expenses, though, and in January he started developing and designing homes outside Sacramento.

"What am I doing to survive? I'm leaving town," said Sanford, founder and owner of Westwind Design Group in Kent. "The only business for me is down in California."

The sluggish economy has hit architects hard, forcing them to lower fees, cut overhead, diversify their design services, and find work out of state — even out of the country — to keep their firms afloat.

Billings at architecture firms nationwide increased by 6 percent from 1999 to 2002, compared with a 160 percent increase in the 1990s, figures from the American Institute of Architects show.

Firms are designing single-family homes, remodeling office space and shuffling employees from commercial real estate — an area clipped by decreased demand for office space — to bustling retail and health-care divisions.

"The entire industry is in a slump because state budget deficits have halted construction of new civic projects and companies are not investing in new capital projects," said Diego Saltes, director for economics and market research for the architect group. "Because of continued low interest rates, the bulk of growth now for architects is in residential real estate."

In the first nine months of this year, Seattle issued 12.5 percent fewer commercial and residential building permits, and a greater percentage were for changes to existing buildings. More than 92 percent of the 4,569 permits were for residential and commercial remodeling projects. In the same period last year, more than 81 percent of the 5,223 permits issued were for remodeling.

Architects at Weber + Thompson in Seattle spent about a third of their time in the late 1990s working on commercial buildings, but in the past three years, that has changed.

The 43-employee company now keeps busy working on small commercial projects and condominiums, remodeling office space and doing studies for mixed-used developments. They've eked out a sales increase of 3 to 5 percent this year after two years of flat sales.

"People are looking around like crazy because there's so much money out there, but they are still feeling skittish. We have a lot of looks, but we don't have a lot of projects," said Kristen Scott, one of three partners at Weber + Thompson. "There's this illusion of being really busy, but we're not generating billable income like we would if all these projects had gone forward."

THOMAS JAMES HURST / THE SEATTLE TIMES
One of Joseph Sanford's projects is a remodel of this 1954-designed house in Normandy Park.
Local architecture firms are doing more work out of state and around the world to make up for the sluggish Seattle economy. Weber + Thompson's mixed-use projects in Denver, Portland and San Diego account for about 20 percent of its work this year, and the company expects to do more next year.

MulvannyG2 Architecture, Callison and NBBJ — the three largest firms in the region — have tapped into overseas markets and seen their revenues increase.

Bellevue-based MulvannyG2 has designed large projects in Shanghai and throughout China. It opened a Shanghai office in September 2002. Ming Zhang, senior vice president of MulvannyG2, said their business in China is now 10 percent of the company's work, up from 3 percent three years ago. This year, revenue is expected at $45 million, up $6 million from last year.

At Callison, which is working on mixed-use projects and shopping centers in several Chinese cities, international work makes up 15 percent of the Seattle company's business, an increase of 7 percent over the past two years. The 400-employee firm reported revenue of $68 million this year, up from $60 million in 2000.

"If we were only in the Seattle area, we would be hurting," said Steve Epple, the chief operating officer of Callison.

Companies are capping their expenses on out-of-state work by partnering with local builders and renting desks in the partners' offices or working out of hotel rooms. Firms with more than 100 employees are opening offices in areas where their major clients are expanding. MulvannyG2 followed Costco to California when it opened an office in Irvine, and Callison opened an office in Costa Mesa when Washington Mutual opened new branches in the Golden State.

Sanford says his California work is the only thing keeping his Westwind Design Group afloat. He plans to work in both states until the economy improves.

"The only way to really survive as an architect is to diversify," said Sanford. "I've certainly learned that lesson."

Kristina Shevory: 206-464-2039 or kshevory@seattletimes.com


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