During a declining economy, it's a rare company that hasn't wished for a crystal ball to see into the future. Northwest Construction magazine has brought you the next best thing: we've talked to developers, contractors, architects and engineers throughout Oregon and Washington and asked them to share with our readers their thoughts on jobs, markets and the stability of the commercial building industry in 2003 and beyond. Here's what they had to say:

Candace Robertson, Principal
Robertson, Merryman, Barnes Architects, Inc.
Portland, Ore., architecture firm

Northwest Construction: How do you see the Oregon construction market in 2003?
Candace Robertson: Complicated.

NWC: What markets look strong for 2003 (public and private sector)?
CR: All and none. There will continue to be both strong and weak performers within any "market."

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. - hiring, purchases, etc.)?
CR: In a minor key, scaling back on discretionary spending. As a small firm, we don't see the pendulum swing as dramatically as large firms do. Good times create their own set of problems and in some ways are as challenging as hard times. The mythical middle ground with a nice even work flow is the situation most desirable and most difficult to achieve. That does not, however, mean a steady stream of plain vanilla projects or getting stuck in any particular industry niche.

NWC: During the last industry turndown, what did your firm do to survive?
CR: Our firm is 10 years old and it's been one long roller coaster ride. We fastened our seat belts at the start and have been hanging on ever since. You win half the battle by just showing up, the other half by sticking around. Persistence pays off.

NWC: Will your firm enter new market sectors in 2003? Has it already?
CR:Thinking about it. Customizing a strategy to find pearls suitable for our particular firm no matter what the market.

Terry Goebel, Principal R. B. Goebel General Contractor

Northwest Construction: How do you see the Eastern Washington construction market in 2003?
Terry Goebel: The Eastern Washington construction market looks to be very slow in the first quarter of '03, but late spring appears to bring a number of smaller projects, both public and private to the marketplace. Although there will be no large projects, there will be a normal level of educational projects, as well as a significant number of small to medium size private projects, quickly developed as a result of low interest rates.

NWC: Do you fee the industry is in a recession? If so, how long do you think it will last and why?
TG: The industry is clearly in a recession fall and winter quarter, but should pull even by the summer of '03. It appears that the market will remain at an average level through 2003, but will slip back to negative levels if some major projects, especially in the retail sector, do not finally materialize.

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. - hiring, purchases, etc.)?
TG: Our firm began preparations to hunker down for lean times in early May, but did not actually have to enact the limiting measures until November 1. We believe we will remain at a mandatory low overhead condition until next spring.

NWC: During the last industry downturn, what did your firm do to survive?
TG: Our firm has weathered all of the slowdowns in the last 40 years remarkably well, including the early '80s, but have been hit rather squarely with the current recession because it has impacted our major customers and markets with a vengeance. Because of low interest rates and what appears to be more opportunities to develop where some strength is required, we will self-develop and construct several projects this year. One interesting short-term by-product of a slowdown is that you actually gain on retainages owed and even some collections, while payables are minimized. Consequently, some cash is available that previously went to operations. Although it will be interesting times early in the year, the fit should survive for an otherwise average year.

Rodger Benson, director of business development
Mortenson Bellevue, Wash., general contractor

Northwest Construction: How do you see the Washington construction market in 2003?
RB: We see the Washington construction market declining in 2003 to below 2002 levels. Minimal local economic growth, high unemployment and governmental budget problems at all levels will directly impact investment in capital projects in both the private and public sectors. Projects funded before 9/11/01 have largely been awarded. While there is a considerable amount of capital available for funding new projects, lenders are particularly conservative right now and are requiring presales, pre-leasing, and equity levels that are difficult to achieve in this market.

NWC: What markets look strong for 2003 (public and private sector)?
RB: No markets look particularly strong. Due to low interest rates for mortgages affordable housing should do fairly well. We also anticipate that education will continue to receive significant funding due to our governor's commitment to education and overcrowding in many of our schools.

NWC: Do you feel the industry is in a recession? If so, how long do you think it will last and why?
RB: Yes, we believe our industry is in a recession. Our best GUESS is it will last into 2004. The stock market, employment, retail sales, and consumer confidence must all rebound before we see much recovery in our industry.

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. - hiring, purchases, etc.)?
RB: We've been very careful about our hiring practices and willingness to jump into projects with weak financial backing during the past year.

NWC: During the last industry turndown, what did your firm do to survive?
RB: We primarily looked to new geographic areas for opportunities we hadn't been pursuing prior to the downturn. Domestic and international opportunities with our core national customers in non-traditional markets helped offset fewer opportunities in our core geographic markets.

NWC: Will your firm enter new market sectors in 2003? Has it already?
RB: We're looking at markets that were once important to our firm that we have gotten away from. No firm commitments have been made at this point to diversify beyond our commercial building construction focus.

Eric Overton, COO/Vice-president Sparling Inc. Seattle, Wash., electrical engineering firm

Northwest Construction: How do you see the Oregon/Washington construction market in 2003?
Eric Overton: With Oregon and Washington topping out as our country's two highest unemployment states and a recovery predicted late 2003, more likely 2004, it isn't difficult to predict that the Pacific Northwest is in for a rough ride over the next year or so. We have seen a reduction in local project start-ups, and several that have simply gone on hold waiting for better times to move forward. If we look at all the new projects that we have been awarded over the last year at Sparling, we are seeing a growing number of those coming from out of state, due mostly to the fact there just isn't as much going on here. We do not see this changing much in 2003.

NWC: What markets look strong for 2003 (public and private sector)?
EO: Locally there are two primary hot markets for Sparling: healthcare and higher education. Healthcare continues to be a large part of our backlog and we see this continuing to grow over the next year and beyond.

We are also experiencing strong growth in higher education where owners are updating buildings and building new facilities that support their ever-expanding needs in research and training. Technology is a growing component. Distance learning applications, multi-media presentation systems and connectivity in the classrooms are the norm.

Public projects have been strong in Seattle over the last few years with the rebuilding of many of our landmarks, including the new Seattle Public Library, City Hall and U.S. Federal Courthouse.

There are a few more on the horizon, but certainly not to the extent that we have seen of late.

NWC: Do you feel the industry is in a recession? If so, how long do you think it will last and why?
EO: The industry is definitely in a recession, particularly in the Pacific Northwest. Other regions in the country where we are working are not experiencing the same degree of economic downturn that we are. I believe some of that is due to the fact that their markets were never quite as hot as ours were in the late '90s, so the downturn for the Pacific Northwest has been more substantial. I believe this recession will continue to hang over us for at least the next year. Clients are cautious; everyone is watching local, national and international issues carefully.

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. - hiring, purchases etc)?
EO: I wouldn't say we have changed habits, but we have raised the awareness with our staff that our industry is in for a rough ride, and we need to respond accordingly. We definitely watch our backlog and workload very carefully; and we monitor overhead and watch costs daily. Our firm held strong this past year with no layoffs, adding staff strategically to serve specific markets and services, but certainly slowed compared to the past few years.

NWC: During the last industry turndown, what did your firm do to survive?
EO: Sparling was uniquely positioned in the early '80s being more market focused, but we were also a 20-person firm, much different than today. We have been very fortunate over the years to be well positioned in the market to not feel the effects of past slowdowns; in fact this current recession is the first time in my tenure at Sparling that we have truly experienced the effects. We remain a very agile firm with expertise in a variety of market sectors. This has helped us shift to strong markets and move with our clients.

NWC: Will your firm enter new market sectors in 2003? Has it already?
EO: Sparling is always looking at new markets and services to add value to our clients' projects. With a growing backlog of national projects, we will continue to seek opportunities in those geographical locations. We also see new market sector opportunities in marine design, wireless technologies, network consulting and security consulting services. We are always considering new market sectors that fit with our strategic plan and will help continue Sparling's growth in the future. The key for any firm today is flexibility and mobility, go where your clients go, bring added value and deliver more than promised.

Bart Eberwein, Vice-president Hoffman Construction Portland, Ore., general contractor

Northwest Construction: How do you see the Oregon/Washington construction market in 2003?
Bart Eberwein: Slowing. No powerful momentum drivers. Private sector looks like this to me: The industrial market has a lot of capacity; few manufacturers are ordering new factories or significant upgrades to their existing facilities. The biggies in the northwest - aerospace, computer chips, and wood products, even power - all look to be in a holding pattern. The developer-led commercial market appears overbuilt after the torrid '90s, especially the speculative office tower market. Government work is still out there, but it is definitely slowing as the realities of a smaller tax base hits home.

NWC: What markets look strong for 2003 (public and private sector)?
BE: Housing is a bright light as the American dream has become more affordable with lower interest rates. Medical is strong, driven in large part by aging boomers who want a more upscale hospital experience and are willing to pay for it.

NWC: Do you feel the industry is in a recession? If so, how long do you think it will last and why?
BE: Construction is a cyclical industry. We are downstream of the manufacturing and service industries. It sure feels like a recession when we are waiting for computers to fly off the shelves again, and people to travel more and fill airplanes, hotels and restaurants again. When construction firms are laying off good people and more projects are cancelled than started…what do you call that?

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. - hiring, purchases, etc.)?
BE: Yes and no. We are looking a bit further afield, but Hoffman has always weathered, sometimes even prospered, through industry downturns by maintaining true-to-core principals of diversification and customer service. Our motto is, "Hoffman Builds." That means, if there's a project in the Northwest, from a church to an art museum to a water treatment plant, we'll show the customer a track record, a winning team and a collaborative attitude to help them build capacity, improve performance, etc.

NWC: During the last industry turndown, what did your firm do to survive?
BE: Can't slack on the customer service, even when times are tight. In hindsight, the best thing we did was keep our high-tech teams intact. When the chipmakers came back to life we had four or five teams and could build fab projects in multiple locations for multiple clients.

NWC: Will your firm enter new market sectors in 2003? Has it already?
BE: We're looking, but this recession seems to have hit all regions and all industries.

R. Ronald Wells, Partner Wells and Company Spokane, Wash., development and construction firm

Northwest Construction: How do you see the Eastern Washington construction market in 2003?
Ron Wells: I would guess - and it's that, a guess - that it will be slightly down in Eastern Washington in 2003 from 2002.

NWC: What markets look strong for 2003 (public and private sector)?
RW: There are not very many public projects on the horizon, other than those currently in the pipeline, like the Facilities Expansion (Spokane Convention Center, Spokane Fairgrounds and Mirabeau Point in the Spokane Valley). I think one of the private sector markets that will be strong for 2003 is downtown Spokane. There is a lot of interest and a lot of momentum coming off of several major investments. The attitude about downtown is uniquely positive and upbeat. There is a lot of interest.

NWC: Do you feel the industry is in a recession? If so, how long do you think it will last and why?
RW: The industry is in a recession because the national retail and office markets are hurting. Businesses are cutting back, generally. Local markets and certain local tenants seem to be doing better. Certain pockets of housing demand will continue to be strong. I see no end to the national and regional recession. Of deeper concern to overall economic activity is the growing attitude of consumers to cut back and economize. The more that attitude is encouraged, the more it becomes commonplace.

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. hiring, purchases, etc.)?
RW: Yes, our development business, which drives most of our construction activity has changed. We began 2001 with 180,000 sq. ft. of space in the development pipeline, none of which was pre-leased, in three different projects. As of today, that number is down to about 145,000 sq. ft., and a strong likelihood a lease will be signed any day that would reduce the number to 125,000 sq. ft. That's still a lot of speculative space, composed of downtown office and retail. We normally begin one or two new projects each year. We have only begun one in the last two years, and that one only very recently.

NWC: During the last industry turndown, what did your firm do to survive?
RW: We downsized. We cut operating expenses. We trimmed our budgets wherever possible. We regrettably laid off some valued employees.

NWC: Will your firm enter new market sectors in 2003? Has it already?
RW: We anticipate entering two new market sectors in 2003. We hope to announce a major retail development in downtown Spokane, and at least one new multi-housing condominium project in downtown Spokane in 2003, both specialized market sectors that add some breadth to their existing respective product lines.

Mark Edlen, Principal Gerding/Edlen Development Co.Portland, Ore., developer

Northwest Construction: How do you see the Oregon construction market in 2003?
Mark Edlen: The metropolitan area has been definitely impacted by the slowdown in commercial activity. In particular, the office market is overbuilt, specifically in the suburban areas where we see virtually no new construction for the coming year. In the Central Business District, we do not expect to see any private projects commence during 2003 due to the softness in the commercial leasing markets. We do expect to see the continuation of The Brewery Blocks, which has been an extremely successful mixed-use project located in the Pearl District adjacent to the Central Business District.

NWC: What markets look strong for 2003 (public and private sector)?
ME: On the private side, we expect continued demand for urban housing, which will include both for sale and for rent projects. With The Brewery Blocks' commencement of its high-rise apartment project, this will be the first new high-rise apartment project commenced in Portland in several decades. The demand for this type of product has been spurred by the increased interest in urban living, and in particular, in areas such as the Pearl District, which offer a true mixed-use environment.

We also see new projects being planned in 2003 with potential construction starts in late 2003 and early 2004 in areas along the Willamette River adjacent to the Central Business District, such as the North Macadam area.

NWC: Do you fee the industry is in a recession? If so, how long do you think it will last and why?
ME: Clearly, the marketplace has slowed dramatically, to the extent that many feel that Portland is in a recessionary environment. In 2002, Oregon had some of the highest unemployment rates in the nation, which have now abated. In past years, semiconductor and other technology-related industries have driven Portland out of economic slowdowns in a rather graphic fashion. As we come out of the current economic malaise, our growth will be slow but steady rather than dynamic. We believe that the economic upturn will be spread across many industries rather than concentrated in one particular industry.

Portland continues to be uniquely positioned on the West Coast as an affordable alternative to other large cities with a very dynamic urban core. It remains attractive to employers and employees alike. Thus, we see an 18 to 24 month period during which demand will increase gradually as current vacancies are filled and new construction commences following thereafter. While the marketplace has slowed dramatically, as always there continues to be pockets of demands that are fulfilled by those that are more creative, customer-oriented, and flexible in the manner in which they serve their customer's needs.

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. hiring, purchases, etc.)?
ME: As with most dynamic development firms and many others in the Portland area, we have continually attempted to adapt the methods in which we serve our customers' needs and deliver product to the marketplace. As such, as the commercial office environment has slowed down, we have attempted to adapt our business to deliver product to the marketplace where demand warrants the same, such as emphasizing more urban mixed-use projects. Additionally, as with many other development firms, we continue to provide development services to companies that do not have the expertise in-house in delivering build-to-suit projects specifically designed to meet those needs.

NWC: Will your firm enter new market sectors in 2003? Has it already?
ME: Our firm will not look to enter new geographic marketplaces, but rather we will concentrate on our core strengths and competencies in the Oregon marketplace. The strengths that we will look to emphasize will be our significant local presence, our flexibility in serving the needs of our clients, and the credibility that we have established in the Oregon marketplace.

George Nachtsheim, Principal INTEGRUS Architecture Spokane, Wash., architecture firm

Northwest Construction: How do you see the Washington construction market in 2003?
George Nachtsheim: I see the construction market in Washington slow in the first quarter but picking up through the year.

NWC: What markets look strong for 2003 (public and private sector)?
GN: The traditional markets - housing (single and multi-family with senior emphasis), K-12 school, health care, justice, and renovation/retrofit in all markets - will probably remain stable.

NWC: Do you feel the industry is in a recession? If so, how long do you think it will last and why?
GN: Yes. I think we will see the start of recovery in mid 2003. State budgets will be in place and the economy will have had time to weather the storm and readjust.

NWC: Has your firm changed its habits or practices in response to the slowing economy (e.g. - hiring, purchases, etc.)?
GN: No, we are continuing to position ourselves to be as strong as we can in our market areas.

NWC: During the last industry turndown, what did your firm do to survive?
GN: During the last slowdown, we managed our resources to be efficient and effective. We have continued that approach up to today and have not felt any significant impact from the slowdown.

NWC: Will your firm enter new market sectors in 2003? Has it already?
GN: Probably not, but we are always evaluating opportunities.