The last time we had a rapid downturn in the U.S. economy that truly crushed the profession of architecture was in the late 1980s. What if it were to happen again?
The pundits during the recession that began around 1989 blamed a 1981 tax law that encouraged real-estate investment for the sake of investment rather than to meet demand for space. Soon enough, speculative construction—primarily of office buildings—became one of those too-good-to-be-true deals, sort of like the dot.com IPOs of the 1990s or the home-flipping investments of this decade. Of course, it turned out that, yes, the deals were too good to be true. And, as you may recall, commercial construction came to a screeching halt. Firms laid off thousands of architects or went out of business altogether.
The joke at the time: “How do you call an architect in New York City? Holler, ‘Taxi!’” Except, it wasn’t funny.
As a result, urged on by its Practice Management Committee, the AIA national component launched a program, “Managing Rapid Change,” and enlisted the help of many, including current AIA Chief Economist Kermit Baker, to map a holding pattern for firms to follow until the market turned around. Assess your core talents, attack existing markets, get lean, and do it now, they said.
It was tough, but those times passed, thankfully. And the profession has enjoyed 15 or so pretty good years, despite the dot.com crash. (But that’s another story.) The upshot of prosperity, though, is that there are many firm principals in this country who have never experienced such an abrupt crash and likely wouldn’t react well if one occurred.
The dollar is weak, there are tens of billions of dollars in complex investments out there based on mortgages that are questionable at best, the stock markets are schizophrenic, and energy prices are on a skyrocket to the moon. Are we ready for what might come next? (And could even talking about how bad it might get become a self-fulfilling prophesy?)
What do you think?