Landscape Architect's Economic Anxiety

From the fall of the sub-prime debacle to the tightening of credit, I would imagine many landscape architects and other designers of the built environment are reflecting on the foreseeable economic outlook with some anxiety. According to the AIA’s 2007 Component Survey of Business Conditions, the outlook in their words is “relatively strong”. Though the survey acknowledges that the conditions are weaker nationwide than they were a year ago. The best areas of the country were the Southwest and Texas. Michigan, Ohio, and Southern Florida were the worst regions that responded.

Based on the current outlook, I anticipate a sharp weakening in the 2008 business conditions. There are a number of serious issues that we will need to overcome if the economic picture is to improve. These issues include the highly probable continuing of defaults on home mortgage loans, deepening slide of the dollar against the Euro and other currencies, annual rise in health care and energy cost, and our nation’s dismal negative savings rate. Fundamentally, the economic system is out of balance. As always the economics has no compassion for anyone. Home builders, Home Depot, Lowes, and other related businesses have rightfully cut their outlook in 2008. Yesterday the Wall Street Journal reported a small drop in retail property values from September. Commercial, Office, and retail was suppose to balance out the losses in the housing sector, but it looks like they are weakening as well.

As a landscape architect, I feel powerless in affecting change within the economic system. Like most landscape architects, I will succumb to market forces. Reflecting on this, it made me wonder who will fair better than others. Three aspects of a firm will likely shape how they fair within an uncertain environment. These include financial planning, type, and market.

A firm’s financial planning and business practices are a critical characteristic that will determine the company’s success in trying times. Those that hire and fire based on their short term workload will quickly reduce their payrolls at the expense of their employees and future loyalty. Then there are the poor financial planners that assume all will be fine because it always has been. While they may want to hold the company together, their hands will be forced to lay off their staff as it becomes more difficult to keep them. Firms that have been through trying economic times (at least 15 years old) and learned from them have prepared for times like these. They are the ones that will benefit from an experienced loyal staff . When interviewing who ever ask about the financial characteristics of the firm? Besides rumors or interviewing other who have worked for the firm, you really can not learn a lot.

What you do know is the type of firm you work for and its market. It would seem those that specialize in aspects of the profession that are experiencing more of a downturn will have a tougher time and may be forced to adapt. While those that are more generalist are adaptable to a changing market. In addition, public work is probably more stable than private work which is more volatile because of a reliance on credit and consumer spending. The best situation is likely a general multi-disciplinary firm. The firm’s market base is important as well. Those that have an international base are likely to fair better than those that are more localized, particularly those who practice in emerging markets.

While it may seem that the economic outlook will dim for a time, it is important to remember that the industry is cyclical and that everyone needs a place to live, so development will continue. Maybe not at the breakneck pace of the last few years, but it will continue. Though with fewer jobs, competition will be more fierce. Firms will need to get more savvy.