GRAND RAPIDS — Over the last few years, Cornerstone Architects Inc. PC has been riding the wave of business in the design and construction industry.
Coming out of the last recession, the Grand Rapids-based firm, which also operates an office in Traverse City, set out on the “pretty logical” step to eliminate as much debt as possible to ensure the company could weather any future economic downturns.
“We’re planners so we always plan for our clients, but it’s amazing how we neglected our own plans,” said Tom Nemitz, principal of Cornerstone Architects. “This is one of the instances where we did put it in place. We wanted to get a plan to not only eliminate debt but also try to get a little bit of cushion because we were anticipating a recession … and we’ve got great people and we want to hang on to them.
“Now with the pandemic, despite our best efforts in planning, who could have seen that coming?”
In the weeks after the COVID-19 pandemic hit, Cornerstone Architects had 60 percent of its active projects get placed on hold as clients tried to figure out what the crisis will mean for them and their finances.
“None of them have evaporated, thank goodness, but the others have been put on hold pending financing. A couple of them are businesses so they’re waiting to see what transpires and that they’ll have enough money to pay their people,” Nemitz said, noting the situation is “negatively affecting the clients, but also our ability to conduct revenue.”
Cornerstone Architects applied for and received a Paycheck Protection Program loan to help the firm weather the current loss of business.
“Right now, we have cash flow but in two months is the great unknown, and that’s where I think that PPP funding will come into play and help us out quite a bit,” Nemitz said. “It just gives us a little bit more security if things don’t get going as quickly as we all want them to.”
Work continues to move forward for projects that already secured financing, mostly for the firm’s municipal, K-12 and higher education clients.
“Those are great projects to have because they need to really keep moving on them from a design standpoint, and so it benefits us,” Nemitz said.
Looking ahead, Nemitz expects the design and construction industry to remain strong, at least in the short term, because of continued pent-up demand. If anything, the current blip could reset prices and get some clients off the sidelines.
“A lot of our clients still have some pent-up demand, and they’ve been waiting for the right time because construction has been booming so much,” he said. “It’s been difficult for them to really pull the trigger on a number of their projects. A few of them had said, ‘Boy, we really need an adjustment in the economy so that we can afford to build.’ Be careful what you wish for.”
Nemitz cautioned that any return to normalcy will also result in some delays for those complicated projects that have been put on hold as crews re-engage and get back up to speed.
In the meantime, Cornerstone Architects has been “polishing up on our marketing efforts” to stay in touch with current and prospective clients and continue to fill the project pipeline.
“We’ve been fortunate enough not to have to do full-fledged marketing efforts through the last few years, but this is a great time to catch up on some of our marketing,” Nemitz said.
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