Top 2007 Design Firms

Midwest Design Firms Keep Pushing Boundaries

by Elaine Schmidt

All Midwest cities have seen drops in construction starts since this time last year, but the numbers are not necessarily representative of the health of the design end of the industry.

TOP 2007 DESIGN FIRMS

With many Midwest design firms working on geographical expansion of business, declines in individual cities are not having a negative impact. Recently, Midwest Construction surveyed a number of design executives to get their take on the market and the key trends in the business.

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Chicago

Starts in Chicago are down 18% from this time last year.

Still, “this year has been great for us so far,” says Michael Kaufman, partner with Chicago-based Goettsch Partners Inc. “It’s been a combination of U.S. and overseas work.”

Noting that projects in China make up about 30% of the firm’s overall work at present, he says that additional work in the Middle East will bring the overseas percentage of the firm’s overall volume close to 50% this year.

“Just about all of the big design firms are busy, but not all of them, is doing as much overseas as we are,” he says.

Looking forward to 2007 being the firm’s “best year ever, both in backlog and work performed,” Kaufman says Goettsch has picked up 12 to 15 new design professionals in the last nine months.

“We are still looking, but our competitors are looking too,” he says.

St. Louis

Competition for good people is stiff in St. Louis as well, says Clark Davis, vice chairman of HOK in St. Louis, despite an 18% drop in starts there.

“In terms of people across HOK, we have grown by almost 20% in the last 12 to 18 months,” he says. “In St. Louis and Chicago we have grown by 20% in the last six to eight months. For us, the competition for talent is as significant as the competition for work.”

Davis says work has been strong in all areas, from aviation to justice, health care and technology, pointing out that the firm’s international work is an important part of the overall equation.

“Across the firm, about 38 to 40% of our work is international,” he says. “We are seeing a lot of strength in Asia and the Middle East, with more work in the Middle East than we have seen for a number of years.”

Indianapolis

Geographical expansion has added to the strong year and solid backlog RATIO Architects Inc. in Indianapolis has been experiencing, says William Browne Jr., the firm’s principal and president.

“If we were in a city that had direct access internationally, we might start to think about working overseas,” he adds. “We have talked about it but have decided to stay domestic. It’s about being able to service our clients, and if you can’t get good transportation, it’s hard to do that.”

RATIO has been expanding its presence in the Midwest, reaching into Kentucky, Tennessee, North Carolina and Colorado.

Browne says RATIO has been adding staff.

“It’s an ongoing effort that’s as important as a consistent marketing effort,” he says. “You have to get out and sell yourself to some degree to potential employees. The competition is stiff and the employment options are broad.”

Milwaukee

In Milwaukee, a bleak-sounding 58% drop in construction starts may not be indicative of the actual market.

Ongoing projects include the WE Energies Oak Creek power plant, a $2.2 billion project that has been billed as the largest construction project in the history of the state. The project’s two coal-fired power plants are slated to come online in 2009 and 2010.

The $810 million Marquette Interchange reconstruction project, which is replacing the interchange between Interstate 94 and Interstate 43 in downtown Milwaukee, has been under way since 2004. It is slated for completion in 2008.

A 75% drop in Milwaukee’s apartment and condo starts since this time last year reflects a spate of such projects that began in 2006 and are currently under construction.

On Milwaukee’s horizon is the development of a large, fallow swath of land on the northern edge of the city’s downtown area. The strip was created by the demolition of the Park Freeway during the early stages of the Marquette Interchange project.

Key Design Trends

Sustainable design topped the list of trends design executives are seeing.

“We are currently designing a large university campus—a new, significant research campus—in Saudi Arabia, which will rise from the sand near the Red Sea,” HOK in St. Louis’ Davis says. “Our design work for this campus is seriously green. It may approach carbon-neutral performance.”

At RATIO, where nearly 10% of the design staff is LEED certified and the rest are encouraged to pursue certification, an internal committee is beginning work on a sustainable design standard that will actually be higher than the current LEED standard.

In Chicago, Kaufman says that about 30% of Goettsch’s professionals are LEED certified. The firm is striving for complete certification of its professionals.

Building information technology will likely have a major impact on design.

RATIO has been using BIM software for about three years, Browne says. It creates three-dimensional renderings in the construction-document software, significantly advancing the level of detail.

“It’s not glamorous and eye-catching,” he adds. “But I think it will take over and replace AutoCAD and will ultimately create a huge transformation in the way we do business and interface with our clients.”

Looking to the Future

There are concerns about the future at several design firms.

“We all wonder what will change the market,” Davis says. “Inflation could be a major concern and so could a serious credit crunch. The housing credit issue hasn’t affected us yet, but if it snowballed and started to bring in the commercial credit providers it could be a bigger concern.”

Kaufman sees a positive possibility in the residential slump, hoping that the slackening in that market translates to lower material and labor costs.

International news is also concern because so many design firms’ business is tied to oversea markets.

“A broad downturn in the economy would be a worry,” Davis says. “Frankly, so would an international event—a terrorist attack in the U.S., Europe or Asia—that would frighten people and deter them from making the kinds of commitments they are now.”