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Sunday, 06 August 2017 15:42

Local architecture firms take diverging paths as growth continues

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Architecture firm TowerPinkster plans to focus on growing its presence in the Grand Rapids market, where it recently expanded its office by about 2,000 square feet, shown here. Architecture firm TowerPinkster plans to focus on growing its presence in the Grand Rapids market, where it recently expanded its office by about 2,000 square feet, shown here. Courtesy Photo

To some local economic observers, the success of the architecture and engineering industry in West Michigan serves as a microcosm of the region’s broader economy.

In an industry that’s experienced its share of recent hiring sprees, headquarters relocations and continued revenue growth, architecture and engineering executives believe that conditions appear primed for growth for the foreseeable future.

“Our business is strong right now and that has a lot to do with the economy,” said Bjorn Green, president and CEO of Kalamazoo-based architecture and engineering firm TowerPinkster Inc. “When the economy is doing well, our business is doing well. Capital investment seems to move with the vitality of the country. There’s a lot of pent-up demand for work to get done that didn’t get done during the recession.”

The 110-person firm reports hiring 10 new staffers in the first half of 2017, largely driven by an abundance of work in its core sectors of education, health care, industrial and institutional work,  including the major renovation of Gerald R. Ford International Airport in Grand Rapids.

According to Green, the firm’s strategy for the near future consists of trying to become a broader player in the region and particularly in the Grand Rapids area, where TowerPinkster just expanded its downtown office by about 2,000 square feet.

“We’re looking at our workload and our capacity,” Green said of the recent hiring spree. “We’re not hire and fire. We’re really cognizant of how we’re hiring and trying to hire the right people.”

Likewise, GMB Architecture + Engineering Inc. has hired about 14 people in recent months with virtually no turnover, according to president David Bolt.

The Holland-based firm with offices in Grand Rapids and Indianapolis has focused on building its internal culture while also equipping younger staffers with institutional knowledge from veteran architects who will be looking to retire in the coming years, Bolt said.

“That’s really a big cultural focus for us,” Bolt said. “That’s what we’re seeing as the trend in the industry right now. The new workforce coming in needs to gain that experience rapidly to be able to keep up with the levels of work we’re seeing right now. It’s one of the biggest challenges out there. Companies that can do that well are going to succeed.”

Somewhat differently, Grand Rapids-based Integrated Architecture LLC plans to vacate its current headquarters on Lake Drive in southeast Grand Rapids sometime next year. As MiBiz first reported in June, the firm expects to move to a currently vacant 13,600-square-foot building on Ottawa Avenue NW, just north of downtown Grand Rapids.

Executive Vice President Mike Corby said the planned move is less about hiring more employees and more about a desire to be close to downtown and the firm’s client base.

“It’s pretty much a lateral move,” Corby said, adding that the proposed headquarters in the city’s Monroe North neighborhood could hold about 75 employees, 10 more than the firm’s current headcount. “Our model is not to grow beyond a certain point.”

While the firm has made a handful of hires in recent months — and expects to add around four new people before the end of the year — it’s largely gone out of the market to recruit new employees.

“The whole Grand Rapids vibe is obviously getting national attention,” Corby said. “It’s on the radar for people where it may not have been before. Normally, we’re competing with Chicago for good talent.”

SLOWDOWN AHEAD?

Similar to other firms in the region, Integrated Architecture finds itself staying busy in its focus areas of corporate, multifamily residential and institutional work.

While West Michigan’s architecture firms continue to see a bright future in the short to mid term, executives also concede the good times will eventually come to some sort of end, at least temporarily.

That sentiment largely aligns with the findings of the Consensus Construction Forecast released in late July by Washington, D.C.-based American Institute of Architects (AIA).

The forecast projects growth in the range of 3.5 percent to 4 percent for the remainder of this year and next year, with a slowdown in commercial and industrial work largely attributed to ongoing challenges in the construction industry.

“Despite billings at architecture firms performing quite well this year, the larger construction industry is facing a range of issues,” AIA chief economist Kermit Baker said in a statement. “The somewhat weaker outlook is driven by several factors, some dealing with the broader U.S. economy, some dealing with general construction industry fundamentals, and some dealing with weakness in specific construction sectors.”

Local architecture executives largely agreed with Baker’s statement, with Corby noting that the days of large corporate clients getting good deals on construction work have largely passed.

Nonetheless, executives contacted for this report say their healthy backlogs continue to inspire confidence.

TowerPinkster’s Green said it can be a bit challenging to forecast much more than three to five months out, but he notes the firm’s backlog of work currently extends into the second quarter of next year.

“It’s the best we can forecast out in quite a while,” he said. “But I say that with some caution. You’re always at the whims of the economy.”

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Nick Manes

Staff writer

nmanes@mibiz.com

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