Market analysis: Firms compete for slice of American pie
As architecture practices report an upsurge in construction opportunities, analysts warn that recovery from the sub-prime disaster may be slower than frustrated global companies would like
Architects have reported an upsurge in work in the United States following a fresh increase in building.
Construction spending across the pond reached an 18-month high of $807 billion in November, according to research by Reuters. Since July, the amount of cash pumped into housing has risen by eight per cent.
A positive outlook was also indicated by the American Institute of Architects’ (AIA) billings index, which returned a positive result for the second consecutive month at 52 for January.
Although wary of a repeat of the similar, short-lived recovery in late 2010, AIA chief economist Kermit Baker said it was ‘very good news’ for design and construction.
Grimshaw, KPF and engineering firm Buro Happold all plan to hire new staff over the coming year on the back of resurging US ‘confidence’, which they claim has opened up a new wave of architectural opportunities.
Partner at Grimshaw’s New York office, Andrew Whalley reported ‘lively’ competition for staff in the city.
‘You can always tell when there’s a more buoyant economy – people start moving from office to office because there are new opportunities,’ he said.
The company, which has designed New York’s 3,300 bus stops and newsstands, is currently working on a US$95 million water filtration plant in the Bronx and nearby Via Verde, a 222-unit mixed-use affordable housing project with Dattner Architects.
Whalley said New York ‘definitely has a feeling of confidence’, but added: ‘Looking at figures for the US in general is a bit like saying Europe [is in recovery]. There is a vast range of markets: some are doing well, some are waiting to start.’
KPF chair Gene Kohn spoke of ‘some 20 major [corporate] tenants in New York looking for space’ and said ‘high-end residential’ continued to be strong ‘as it is in London’.
The first phase of the AJ100 giant’s 511,000m² Hudson Yards mixed-use redevelopment project in New York, which KPF has been working on for nearly five years, will finally start on site this year.
Kohn said: ‘The whole east coast is certainly showing positive signs that should get stronger later in the year. However, I don’t see as much growth in the west as in the east.’
Despite this, Buro Happold principal David Herd claimed his business in California was growing 20 per cent year-on-year.
‘California is a macro-economy with some of the richest and poorest in America,’ he explained. ‘At the very high end, [with residential schemes for] the ultra-rich, we’ve definitely seen a pick up.’
Herd reported strong demand for high-density social and affordable housing on the ‘European type model’ around transport hubs on Los Angeles’ emerging public transport network.
He said: ‘Los Angeles is transforming itself from a vehicle-based economy to mass transit. There are hundreds of millions of dollars being spent on it at the moment, which as a result creates opportunities for multi-family residential around railway hubs in the European model.’
In the past two years, around 20 Buro Happold staff have relocated from the UK to California to meet this demand.
He added: ‘High-end investment in technology is where the money is going at the moment.’
Expansion by private universities and technology companies on the west coast has created more demand for ‘higher quality’ buildings, according to Herd, which ‘picked up the slack’ following last May’s federal budget crisis when ‘a lot of projects were literally canned overnight’.
Yet the mass building of housing in some areas remains stagnant. Philip Allsopp, chair of Phoenix and Southwest Chapter of the Royal Institute of British Architects USA, said the ‘wake-up call from the sub-prime debacle is being taken seriously – and remembered’.
He warned: ‘Construction continues to be mired in its old habits and, while new energy codes have been instituted, builders and developers appear to be sitting on the sidelines waiting for another chance to continue the explosive sprawl around many US acities showing signs of growth.’
Even in New York, the picture is uneven. Foster + Partners’ 88-storey 2 World Trade Center tower is currently stopped at ground level due to a lack of tenants, while Rogers Stirk Harbour + Partners’ neighbouring 80-storey skyscraper on the Ground Zero site has also halted at podium level until occupants for at least ten of its floors are found.
Despite a mixed picture, any upturn in US construction – perceived or actual – could have a positive impact in Europe and specifically the UK, where construction is predicted to contract 5.2 per cent during 2012.
Austin Williams, lecturer in architecture at the Xi’an Jiaotong-Liverpool University, said: ‘Whether the statistics are correct or not, the main thing is that the construction of new housing, industrial units or urban developments is not proceeding fast enough.
‘America, like most western economies, needs to snap out of its cautious, risk-averse and fearful mindset. There will be no economic recovery if western economies continue to fetishise tiny percentage growth figures rather than reaching for the stars.’