No Downturn for Design Firms

Design firms expect revenues to remain steady, despite the threats of a downturn in the rest of the country, industry leaders say. Credit the foresight to diversify overseas or in strong markets funded by government dollars.

Those with clients in healthcare, education, and work in Asia or the Middle East have seen little effect on work loads or backlogs.

Figures from the past two years show the upturn for design services may still be peaking. CH2MHill, with offices in Bellevue and Portland, reported $261 million in regional revenue in 2007 compared to $195 .8 million in 2006. NBBJ, Seattle, showed a slight up tick over the two-year period posting regional revenues of $97.8 million in 2008 compared to $92 million in 2006. Parametrix is up $9 million this year, at $79 million compared to $70.3 million in last year’s study.

Yost Grube Hall principal, Nels Hall says his firm is diversified enough to withstand a slight downturn. “We do 50% higher ed and then we have a project in Botswana, and several with Chevron in South America and one in Sudan.” It is also in charge of the master plan for the American University in Afghanistan.

Much of this work is done in partnership with local firms. Working overseas is unusual for a firm with only 60 employees, but another principal, Joachi Grube, was with an United Nations agency in the 1960s and maintained his contacts. In 2008 and into 2009, 40 percent of the firm’s work will come from overseas, softening the blow from any downturn here. It also has an indefinite quantity contract with the U.S. State Department.

“Indefinite quantity contracts also even the work flow,” says Hall. These long term rela- tionships have boosted the backlog of the firm. “A few weeks ago we had only four to six months of backlog, but since we got the projects from Chevron we have a year’s worth.”

Sparling, a Seattle-based electrical engineering firm, has similar experience with its backlog. “We were fairly steady, except for the last few months,” says Eric Overton, president.

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Again the firm’s strength is the institutional and higher education markets. “Obviously the housing market isn’t very strong, and we don’t see a lot of strength for office work at big companies like Amazon, Microsoft or Nintendo.” The firm did open an office in San Diego, “which is quite strong,” says Overton.

In the rest of the country where it has work Overton sees some wallet tightening. “The cost of construction is going up and that is slowing things down. Generally I see corporate commercial slowing down.” Hopes are strong that public works projects will take up some of the slack. “After the election things will settle down, and our economy will bounce back in about 12 months,” says Overton.

ZGF with offices in Portland and Seattle, has a strong base in education projects, says Bob Zimmerman, design principal of the Seattle office.

“We are holding steady, especially since we are not overly involved in the housing market,” says Zimmerman. “Our Seattle office is going strong, and we see a little softening in Portland.