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Architect ranks shaken to the foundation

Navid Maqami of GreenbergFarrow. The architecture firms' principals and associate principals have taken pay cuts.

The phones are quiet at Ruth Hirsch Associates, a New York recruitment firm whose clients include design, architectural and construction firms, as well as universities and hospitals.

The company primarily matches firms with architects and other design professionals with at least five years of experience. But now, inquiries have all but halted as layoffs at clients' offices have increased. While other sources said junior-level architects are the ones most likely to lose their jobs, Hirsch said she knows of licensed architects with six years of experience who have been shown the door.

In response to the construction slowdown, New York architectural firms are shedding staff, trimming expenses and switching from residential projects to lower-risk work on institutional and governmental projects with secure funding.

For some, the current conditions are bleak enough to bring to mind the bad old days of New York in the early 1990s, when new construction projects came to a virtual standstill.

The Architecture Billings Index, a leading economic indicator of national construction activity, dropped to its lowest level since the survey began in 1995, the American Institute of Architects reported. The October ABI rating was 36.2, down from the 41.4 mark in September.

While industry groups said no hard numbers for recent layoffs exist, anecdotally, local sources and contributors to the blog on the ARE Forum, an online resource for the architecture profession, identified by name more than 10 firms that reportedly have let people go in recent weeks.

Skidmore Owings & Merrill reportedly laid off about 50 people, according to one industry observer who didn't want to be identified. A spokesperson for the company declined to comment.

And in November, Frank Gehry, the Atlantic Yards architect, laid off over two dozen staffers after Forest City Ratner halted his work on the $4 billion Atlantic Yards project.

Principals at some other companies acknowledged they have reduced staff by layoffs or attrition, typically by about 10 percent. Three or four junior-level architects were among the 12 staffers laid off in October at FXFowle Architects, which employs 180 people in New York and 20 in Dubai. The architects were let go when projects they had been working on came to an end. The company worked with the employees on job placement, said Brien McDaniel, the firm's director of public relations.

When contacted by The Real Deal, several other firms also refused to comment on layoff reports. "Other firms are going through similar situations," said McDaniel. "I don't know if anyone is in a better situation. "

Perkins Eastman, the city's largest architectural firm, laid off about 40 people after 20 of the company's projects in New York were suspended or canceled — the first layoffs in the company's history, Crain's New York Business reported.

Meanwhile, while no new residential jobs are on the table, FXFowle is moving ahead with projects under construction, including Northside Piers on the waterfront in Williamsburg. Two projects developed by Alchemy Properties, Hudson Hill on West 58th Street and Isis on East 77th Street, are also under construction.

Projects overseas are also helping the company's bottom line. FXFowle designed what's billed as the world's tallest and longest-spanning arch bridge in Dubai, the Sheikh Rashid bin Saeed Crossing. The company is also working on mixed-use commercial projects in Ethiopia and Saudi Arabia.

Closer to home, principals at the firm are keeping close tabs on expenses.

"We're being very budget-conscious," McDaniel said. "I'm going to a conference in Boston next week. If it were in California, I would rethink that.
"We're having brown bag meetings instead of catered lunches," he added.

Meanwhile, in the New York and New Jersey offices of GreenbergFarrow, nobody's gotten a pink slip yet, but Navid Maqami isn't sure how much longer the offices can maintain current staffing levels. Layoffs have occurred at company offices in other parts of the country, said Maqami, a principal in the New York office.

The firm's five principals and 10 associate principals have taken pay cuts, he said, declining to say specifically how deep the cuts were. "Mine is too deep," he said with a laugh. "It's survival mode right now."

If conditions do not improve, Maqami, in his worst-case scenario, estimated that up to 30 percent of the staff could be let go. The company employs 90 to 100 people in its New York and New Jersey offices.

GreenbergFarrow's work in New York includes larger mixed-use and retail projects such as the Ikea store in Brooklyn and Uniqlo's flagship store in Soho. The Gateway Center at the Bronx Terminal Market and a renovation of the Manhattan Mall are near completion.

"[It's] like a big hurricane; you don't know how bad it's going to be, and you don't know how much damage it'll cause," he said. "How bad and how long it'll last, we'll have to wait and see and be prepared."

At Gruzen Samton Architects, the principals are shifting from private residential development work to government projects. The company won contracts for an interior renovation project for the Department of Homeland Security in New York and a façade project for the U.S. Court of International Trade, also in New York.

Late last year, principals at the firm learned that a contract with the New York City Transit Authority to rehabilitate a subway station had been reactivated after having been shelved. Design work is scheduled for this year, said William Singer, a Gruzen Samton partner.

The work helped make up for two of the company's condominium projects, a luxury high-rise in Manhattan and a high-end tower in New Jersey, which came to an abrupt halt in the past year when developers abandoned them.

Ten to 12 junior-level architects, interns and support staff workers were let go. (About 100 people work in the New York office.)

"We reduced some of our staff based on a reduction in work for projects that were stopped," Singer said, declining to identify the projects by name.

Still, the firm hired people to fill in for three interior designers who went on maternity leave in recent months, he said, adding the company expects to have enough work to keep the designers busy.

The downturn is hitting firms of all sizes. For example, none of Daniel Frisch's well-heeled clients have abandoned their residential projects, yet his small firm, which specializes in high-end renovations of co-ops, condos and townhouses, is not getting many calls from potential clients with new work. There's very little interest in new construction or significant renovations, said Frisch, whose firm employs seven people.

He expects fewer projects and more competition among firms to win projects in 2009 — and as a result, he's not hiring. When an associate at the firm, not a licensed architect, quit, Frisch did not fill the position.

"I'm not going to rehire anyone at the moment," he said. "I would not want to be coming out of school now looking for a job. It's going be such a challenge for them. I don't feel anybody's job is secure when you go into a market like this."

Stantec Consulting, a Canadian consulting, engineering and design firm, cut 12 from its New York staff in November.

Stantec employs 180 people in New York, at the company's largest U.S. office.

Transportation, surveying and other non-residential work make up the bulk of the jobs handled by the New York staff, said Alison Smith, the company's media coordinator. She noted only one architect was let go.

Roads, water treatment plants and other infrastructure jobs are "still doing OK, since most of the projects had already been funded before the economy took a nosedive," Smith added.