Edifice Complex for Architecture
Crain's Chicago Business
June 14, 1993
All the other pieces I did about architecture were about buildings. My editor at Crain’s Chicago Business, Glenn Coleman, wanted a piece about the architecture business. I enjoyed doing it, although I could never get used to seeing my stuff edited into one-sentence paragraphs, in the newspaper style that this weekly insisted on.
Everybody agrees: We will not see a new office tower in downtown Chicago until the end of the decade.
The only argument among development insiders is . . . which decade?
The late-20th-century building boom that gave Chicago the equivalent of a second Loop has exhausted the kind of speculative office development that put this city on the world's architectural map.
"There isn't an architect in Chicago who hasn't reduced staff" say Dirk Lohan of Lohan Associates.
They're in mourning at Holabird & Root, too. "Any kind of speculative corporate work is all but dead," note Marketing Director Janet Rogatz.
Gloom? Certainly. Doom? Hardly.
When an estimated 10,000 architects and designers converge here this week for conventions of the American Institute of Architects (AIA) and the Union International des Architects, they'll find that architecture is being done in Chicago. Only in new ways, in new places and, in many cases, by new firms (see related story on Page 15).
Still, the development bust has taken its toll. And Chicago architecture never will be the same.
With fees for some jobs more than a quarter below their late-1980s peak, architects now must meet their bottom lines better than they draw them.
Work has shifted from the overbuilt private office sector to the not-quite-overbuilt public and non-profit sectors. And clients are choosier, taking less on faith and insisting that plans be worked out in greater detail earlier in the process.
Most local firms, in short, have responded to competition the same way any smart company does: by downsizing, automating, expanding market opportunities and just plain selling the hell out of the product.
"Today, it's not enough to design well," says Alice Sinkevitch, executive director of the Chicago Chapter of the AIA.
Quite a change from the good old days, when designing for big business made Chicago architecture big business.
Sears of architecture
Consider Skidmore Owings & Merrill, a firm that was, in many respects, the Sears, Roebuck and Co. of architecture.
The two have more in common than being the designer and client of Sears Tower. By catering to major companies like Sears, Skidmore grew into a sizable force itself: At its peak in 1987, it had 1,700 people on the payroll worldwide, 700 of them in Chicago.
Yet both companies became victims of their own success, losing their commanding shares of changing markets to nimbler competitors.
Skidmore in 1989 was overtaken as Chicago's top dog--as measured both by local construction volume and number of architects--by Perkins & Will, a more diversified operation that today employs 414, compared with Skidmore's 276.
Since then, the gentlemen's-club environment of big-time architecture has disappeared, supplanted by an atmosphere that resembles the rough and tumble of a soybean pit.
"We are seeing more competition," reports. Peter Landon of Landon' Architects Ltd., which specializes in design work for the nonprofit sector.
Smaller firms accustomed to owning that niche suddenly are squaring off against firms that only two years ago wouldn't have touched low-cost housing or a day care center.
Mr. Landon, for instance, says he's been bid against by both small shops known for upscale residential work and at least one top 20 firm trying to get its foot in the door of new customers.
Lots of architects and less work also means pressure on prices.
"Competition is incredible--and clients are willing to take advantage of it," says Perkins & Will President James M. Stevenson.
Reports Christopher Mekus of Mekus Johnson Inc., "Fees have become a dramatic factor in decision-making about choice of firm.
"Clients," he adds, "take longer to decide, and demand more information upfront. That costs money."
Example: Mekus Johnson dropped nearly $30,000 preparing presentations for a master plan project that it chased for three years and lost.
A really big-bucks design competition can cost 10 times that. As one chastened veteran of such contests recalls, "You spend $100,000 on a model and they give you a handshake and a 'thank you.' "
The traditional formula by which an architect was paid a flat percentage of a project' s construction cost also is cracking. Major architects have been known to offer schematic drawings for a proposed project at no charge--the design equivalent of a loss leader--in the hope of being reimbursed if their firm is awarded the commission.
"We're our own worst enemy," sighs Mr. Mekus.
Buildings equal advertising
Traditionally, a firm's work was its advertising. An early Helmut Jahn skyscraper is as much a billboard as a building. Most of the antics of the '80s--a cupola here, a pointy roof there--was the result of architects trying to distinguish themselves in a Loop that had become as crowded as a supermarket cereal shelf.
But for firms without marquee-quality designers, such as Perkins & Will' s Ralph Johnson, marketing has become crucial. Trained as artists with a capital "A," many architects are having to learn to present a building like a pastry chef dressing up a tart on a tray.
Holabird & Root. which, after 113 years in the business, may be assumed to have learned a thing or two about surviving building recessions, today finds that, in Ms. Rogatz's words. "we must peddle our goods hard' to retain even decades-old customers such as IBM Corp. or Illinois Bell.
Fewer commissions, lower fees, an environment in which firms spend more time getting jobs than doing them--why isn't the sky above the Loop raining architects leaping to their doom?
Because the building bust clobbered only one part of the city's architectural practice, albeit the gaudiest one--speculative office towers.
With fewer tall buildings, hungry architects are feeding lower on the food chain. But feeding they are.
"A lot of firms restructured, and are now doing not so much less work as different kinds of work," says Ms. Sinkevitch of Chicago AIA.
In fact, 25% of the local projects described in a CRAIN'S survey of top architecture firms in 1987 were for clients in the health care, non-profit or public fields. In an update of that survey for this article, 60% of the projects are in those industries.
In the last three or four years, there also has been a shift from new building design to restoration, interior architecture and related services, such as engineering. And somebody somewhere always needs a new airport terminal.
Many architects have met the challenges of a changing competitive environment like everyone else: They've gone back to college.
One of Holabird & Root' s strengths is highly specialized, technical structures, such as the health sciences library at Northwestern University and the physics building at Northern Illinois University. The firm also designed the University of Chicago's Graduate School of Public Policy and a 300,000-square-foot expansion of Loyola's Water Tower campus.
Lohan Associates designed the new molecular biology center at the University of Illinois at Chicago and the U of C Graduate School of Business building.
Another way to diversify is not to build different buildings, but sell them to different markets.
Perkins & Will went international in the mid-1960s, when it opened a London office. In the last three years, it has done work in Taiwan, Singapore and Korea and has entered into a joint venture with a German firm in Berlin.
Indeed, the real most are enough local German and German-American architects in Berlin these days to form a branch office of AIA Chicago.
"Person in Osaka"
Says German-born Mr. Lohan, who inherited grandfather Ludwig Mies van der Rohe's Chicago firm: "We have an office in Berlin and a person in Osaka. We haven't earned enough from foreign markets yet to make a difference, but we see this as an effort that will bear fruit in the long term."
One of the reasons Mr. Jahn is so good at designing airport terminals is because he has studied them so closely as a customer. He spends a week of every month abroad-not surprising, since more than 80 of Murphy/Jahn's recent commissions are overseas projects, such as Sony's European headquarters in Berlin.
"This practice was set up to do large-scale projects," explains a Murphy/Jahn spokesman, "and we go where the work is."
Chicago architects have a marketable cachet abroad, and building design is a valuable Illinois export. (For instance, all of the actual work on Murphy/Jahn projects, such as the new Cologne-Bonn airport, will be done in Mr. Jahn' s Wacker Drive office.)
But just as the rest of the world is open to Chicago architects, Chicago now is open to the rest of the world. In the 1980s, big names from Spain, Argentina, Japan and New York began to poach on a commercial market that traditionally belonged almost exclusively to local firms.
And while opportunities are richer abroad—at the moment—so are costs and competition.
Holabird & Root has followed a different competitive strategy. The firm has offices in Rochester, Minn., as well as Chicago, and has opted to keep its traditional regional focus. "The Midwest is where our client base is," explains Ms. Rogatz, "and where our reputation was made."
Many successful smaller firms have survived Chicago's periodic building depressions not by regional specialization but by design specialization. Much the way desert toads survive drought, they have adapted to an environmental niche.
Ware Associates (founded in 1949) and Walter H. Sobel & Associates (1936) are to courts facilities what Mr. Jahn is to skyscrapers. Ask the medical care crowd to name a really good architect and they'll likely respond with the name Jensen & Halstead Ltd. (1968).
But diversification is more typical for the larger survivors.
"We've always been fairly diversified," says Mr. Lohan, "so, we were not totally dependent on the commercial development."
Outside the safe harbors of the major firms, the weather is still rough.
"There will be a shakeout." says Mr. Mekus. "There are too many talented people chasing too few jobs."
When those people quit chasing, they often disappear into architecture's equivalent of the gray market economy: designing showrooms and trade shows, doing facilities management, peddling building products.
Economic uncertainty has other stultifying effects.
In flush times, architects change firms almost as often as they change pencil leads.
"That's healthy for both the individuals and the firms, which get an infusion of new blood," says Sally Levine, principal of Levine Design Ltd. and co-founder of CARY (Chicks in Architecture Refuse to Yield), a Chicago-based collective drawing attention to the historically miserable position of women in the field.
"Now," she says, "it's deadlock, because everybody is afraid for their jobs."
And several factors suggest that tough times may get tougher.
Today's busy health care markets soon may be revealed to be as overextended as the office market, once Congress gets serious about trimming health care costs. Public higher education projects face increasingly chintzy state budgeteers. And foreign markets are vulnerable to recession, especially in Germany, where even Sony recently put its ballyhooed Berlin project on hold.
Continuing market change
As for the local office market, demand may never reach 1980s levels again, as the highly centralized white-collar office becomes decentralized, downsized and possibly technologized out of existence.
Even that may not be altogether a bad thing. Demand for architectural services is only haphazardly linked to need, of course. The demise of the big commercial building has left plenty of architects with time to examine their professional consciences.
Younger architects, especially, are questioning the smash-and-grab values of tall structures built fast and flashy, maximizing short-term private return over long-term public good. One can find professional rewards of all kinds in modest projects scattered throughout the city—in elementary schools, day care centers, nursing homes, health clinics, neighborhood marketplaces, often housed in rescued commercial and institutional landmarks that recycle both architecture and communities.
This spasm of social conscience may be triggered partly by economic desperation masquerading as altruism. Whatever the motive, Chicago might actually see an architectural market in which top talent is brought to bear on the more modest but essential structures that are needed for a city—and a region—to prosper. ■