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What do you think about this economic idea for architect?

May 16 '11 18 Last Comment
piero1910
May 16, 11 10:19 pm

I think that architects need to be involved in business, because they always design for someone but never for their own benefit. Why do architects let this happen? Because architects never invest their revenues in their projects(I am not talking about design, when I said Business. I refer to investments in real estates); although, some people would argue that architects do not need to make investments because they have high salaries. In fact if they would have high salaries, they would not be living poorly right now, because architecture is not having a good situation due to the economic recession. As a result, a lot of architects have lost their jobs. Moreover, architects depend too much on other people to do projects that they want to( Of course, They have to start with small projects). Architects do not really have freedom on their job because they do not design what they desire, architect have to design what their clients want. Architects should invest their incomes to build and sell their projects( As fashion designers do, they design products and they sell the products by themselves), instead of waiting for clients to contract them to create a building’s design. Presently, the involvement in economy is important, because architects will not sustain the profession only with design; they need to get more involved in the business area, become more independents, and show off that they can do more than just designing because architects could be also really good doing business but they do not use that ability at all. In my opinion, the profession needs some changes because it is being too conservative. For this reason, civil engineers are taking control of the construction sector because they are doing more than architects do. Furthermore, a civil engineer is currently also a contractor whereas the majority of architects are not. Civil engineering firms are three times richer than architecture firms are. Architecture firm should also be real estate developer because architects deserve to have that right as civil engineers are also contractors. Architect’s rights have to make good improvements, because architects should be the ones who design the entire building without the necessity of someone else as a civil engineer. Since, architects as Michelangelo, Filippo Brunelleschi, Leon Battista Alberti and Christopher Wren created and built magnificent buildings without civil engineers. A lot of those buildings are still in the world, and some of those buildings are better than buildings which civil engineers have been involved. The civil engineers should only focus on transportation and industrial services. Architects should learn more about structures. In that way, they would not need civil engineers in their jobs, because civil engineers are also the ones who are dulling the architecture sector. Architects also work hard, and get very little for that great sacrifice.

 

phld21
May 17, 11 9:52 am

It sounds great for architects to expand their roles to become developers and contractors, investing and building their own projects.  The problem is that being an architect, a contractor or a developer are all very different skill sets that can take years to develop.  It's interesting, but buildings today are by definition a collaboration.  The entire process from beginning to end is complex and requires many people with different skill sets. 

 

The other problem is that architects don't have a lot of capitol to invest in their projects.  They don't have investors, and even getting a small loan to sustain their firm can be a daunting task for a new firm trying to stay afloat.  They don't have the money to invest even if they wanted to because buildings are expensive.  The real estate market tanked: developers, contractors, architects, civil engineers and construction workers have all been hurt.  If you want a good example of an architecture firm that does act as part investor/developer than you should look at some of SHOP's work.

 

http://www.archdaily.com/9081/archdaily-interviews-shop-architects/

http://www.shoparc.com/#

 

Don't privilege architect's skill sets above others.  Seek out opportunities where your skills are needed, and work with others around you to make projects better. 

 

 

piero1910
May 17, 11 7:54 pm

You misunderstood a little my point because I am not saying those architects are going to start to invest in big projects as buildings.  They must start to invest in houses or small buildings. However, there are famous architecture firms which have money to invest in buildings but they do not do it. My argument is that how it is possible that civil engineers are contractor but architects are nobody important in the financial world. Architects should be real estate developer. Even the best fashion designers started with small stores. Furthermore, I argue that many architects come from rich families. Therefore, a lot of architects can develop this idea. In my opinion, this idea will make a bigger architecture. Architect could autonomously act.  

snook_dude
May 18, 11 8:03 am

Do you Hear Me:  John Portman...John Portman....John Portman.

piero1910
May 18, 11 9:56 am

Why did you say that? I'm just opining an idea which architects should take because if they take it, their economy will increase and they will not be affected by economic recession. People won't see with inferiority. 

trace™
May 18, 11 10:43 am

Pier - you are missing the point [that phld21 is making] - you need money to make money.  It takes a significant amount of liquidity to invest in in re dev, certainly not as easy as "just do it".  

 

I am not sure how many developer's you work with, but I have been working with tons for years, if architecture firms had been investing in their projects the world would have significantly less left after this recession - they'd be bankrupt and gone.

 

Also, I don't know of any architect's that come from "rich" families (that's just me personally).  Obviously there are some, I just don't know any.

 

 

You are taking something that is far more complex and over simplifying it.  It sounds nice, and, indeed, we've been talking about that for years on here (certainly not a new/original idea).  

 

Get some exposure to re developers and you'll understand how it works a little better.  More risk does not always equal more profits.  Most of the developers I know are bankrupt or barely above water, whereas there are at least some architecture firms that are doing ok.

 

Overall, I agree with you and that's why I left the traditional career path (of an architect) long ago, but do keep in mind that things are not nearly as simple as you think.  

piero1910
May 18, 11 12:32 pm

Hi Trace,

 

Of course, I understand your point. I know that it is not easy. I know that that idea is hard to make in this moment due to the economy recession, but architect can ask for loans to build their projects, and start to amplify and develop this idea. Actually,  they should start with small real estates as houses. I am not saying that they should start constructing a skyscraper. That is extremely hard to do in the beginning. However, I think that there are architecture firms that can start doing this as Norman Foster or SOM. They have money to start some business in architecture. 

TaliesinAGG
May 18, 11 1:06 pm

The big flaw, at least now,...is that there is little to no financing being made available.  Jonathan Segal in San Diego would perhaps be my model.

won and done williams
May 18, 11 2:04 pm

I think you have to ask, "What are the advantages of being the architect and the developer over just being the developer?"

 

Clearly, the big advantage is you save on design fees. Being able to shave off 3-4% of your development costs is an advantage when margins are thin. Is that enough to make your financing proposal viable? It can't hurt.

 

The problem I see however is that architects are not developers. Architects have different priorities than developers. 90% of the projects on this site have limited to no speculative market; they are one-offs for specific clients. I suppose architects could try to teach themselves to think and work like developers, but there is a steep learning curve and many of the architect's instincts and inclinations regarding good design run counter to profitable development.

 

Not saying it's not possible, but I've seen a few architects get themselves into serious financial trouble because they fancied themselves to be developers.

trace™
May 18, 11 2:19 pm

Sorry Pier, I still think you are missing the points being made - there is NO money.

 

Here's an example for you:

 

2000 SF House

 

Land:  $200,000

Construction:  $400,000

 

Total:  $600,000

Sale Price (good economy):  $900,000

Sale Price (now):  $600,000, if you are lucky

 

30% Down on Loan (what banks are asking for now):  $180,000

 

Monthly Payments:  $5000

 

Strength of guarantor/liquidity needed:  at least the amount of the loan

 

 

So, for an apparently "simple" situation, you still need $180,000 of cash and you need the liquidity to back up the loan.  

You are paying $5000 to sit on the house, until it is sold (and today's market you'd be hoping you could rent it to cover the $5k/month).

 

That's a lot of money to throw away per month.  You also have that $180k tied up, plus if the bank decides to call in the loan, you are totally screwed (you'd have a firesale on the house, and pray you could get out without losing everything you own, if you can't sell it in time, gets foreclosed on and the bank goes after your personal assets.  Fun, eh?)

 

I don't know of many people that have that kind of cash sitting around collecting dust, nor do I know of many firms that have that on hand either.

 

 

As a comparison, let's say you had that in the stock market, you would have made a ton in the last few years, or, at the very least, you'd have a diversified portfolio (gold, bonds, blue chips, etc.) and mitigate some of the risk out there.  Statistically, the market is the best place to be, long term.

 

 

 

 

 

It isn't impossible, but it literally takes money to make money.  That's why most small developer's work with their own money and their own guaranty on the loans, but this is also why most are bankrupt now, including loosing all their personal assets in this mess.

 

There are examples, like Segal, that have gone this way.  I know of some locally that have done well being involved with the development, but they are suffering now, with tons of empty buildings.  

 

 

Lastly, SOM and Foster doesn't need to risk things.  The guys making the decisions are making a very good living with very, very little risk.  Why would they change things?  

 

 

 

Hope that helps, just trying to put it all in perspective for you.  I hear you, and, like I've posted a million times, don't like the traditional career in architecture.  However, you do need to understand that it is far more difficult than what you are suggesting.  Cheers.

quizzical
May 18, 11 3:14 pm

Although I think this thread is on the verge of getting totally out of control, I would like to weigh in here with some personal experience. For about 1/3 of my career, I worked not as an architect but as a developer -- I did NOT try to combine the two disciplines in a meaningful way at the same time.

 

Trace is correct -- when times are good and money is available from banks or other sources, it's relatively easy to get deals started without too much of your own money. But, when times are hard, one must be independently wealthy - almost to the point where one doesn't need bank financing - to make deals happen.

 

It's also true that good times enable developers to make huge amounts of money -- and bad times can cause them literally to lose their shirts -- real estate is a VERY risky proposition if you don't have huge staying power. I have two very good friends who each had to write personal checks back to the bank for $1,000,000 when one of their deals went sour and the bank called in their personal guarantees. 

 

Apropos this particular thread, real estate development requires a mind-set and appetite for risk that I don't find very often -- if at all -- among most of the architects I know. While the OP is pounding what seems, on the surface, to be a good idea, in the real world most people who pursued training as design professionals simply don't possess either the aptitude or the attitude necessary to be successful in real estate, which is a vastly different endeavor than design.

piero1910
May 18, 11 7:05 pm

OK. I understand your point, but you are misunderstanding my point a little bit because you are searching for properties in Expensive cities and areas as San Francisco. San Francisco is not a cheap city to live. Architects have to look for properties in non-expensive cities as Santa Clara or another city. Therefore, you think that that is not a solution. I ask you a question. How can Architects increase their revenues and their salaries? Because this last economic recession was a lesson for architects. Thus, What would happen is architects do not try to find a new solution for next time? They have to find a new solution for the career. They have to expand their career. Architecture is a career which has not changed for a long time. Design is not going to sustain this profession in the future. So I want to know what your solution for architects is. Furthermore, architects have to begin to take risks.  This is the only way that they will make a better career, and this is world. If we do not risk, we will never get anything. 

el jeffe
May 18, 11 7:39 pm

"Because this last economic recession was a lesson for architects."

 

here we go - please tell me what you think the lesson(s) is/are?

 

"Design is not going to sustain this profession in the future."

 

to put it much more politely than i had originally written, i'm not sure how you can make such a statement; i'd argue that design is what'll save our collective asses.

 

"Furthermore, architects have to begin to take risks."

 

i understand you're probably young and simply don't understand the workings of the larger world, but you really don't know what the fuck you're talking about. architects DEAL with risk daily. it's our fucking job.

i once had a discussion with a developer and he wanted us to take on some additional task (it would save him having yet another consultant) that i really didn't technically know enough about but it was arguably a small portion of the project. we replied that we were a little concerned about the liability of taking it on. his somewhat teasing but appropriate response was (and this guy was an architect that became a developer), "what the fuck, you architects swim in a fucking ocean of liability all day..."

 

dude, just wishing it were so doesn't make it.

piero1910
May 18, 11 7:54 pm

First, I can see that you are not a real architect because a good architect will never use that kind of vocabulary. You didn't really know what you are talking about. You misunderstood my point. What I am trying to explain is that architect should find another economic resource for their profession. They do not have to abandon the design. Right now, I completely understand why the profession is having a difficult time due to people like you(el jeffe). Well, people like that are in every profession. 

Please, I just give you evidence with this article:

http://www.bdonline.co.uk/news/change-or-die-riba-tells-architects/5013898.article

So, Architects do not need more money according to you. 

trace™
May 18, 11 9:00 pm

Wow, pier, I thought you were legitimately interested in the development world and possibilities involving architecture.  Clearly, though, you have revealed your darker, true colors.

 

All I can say now is that you are doing a good job of alienating the community here.  We have been around a long time, on these boards for over a decade and have been working in the "real" world for longer, to throw crap like that back at people trying to offer some words of wisdom is simply childish.

 

Good day.

piero1910
May 18, 11 9:59 pm

Thank you very much for your attention Trace. I really appreciate that, but I do not understand to who you are sending those words. Of course, the development is completely important, but my argument is that architects deserve more money for their job and I do not think that society is going to pay them more money or increase their salaries. Therefore, I just wanted to develop an idea. Although, all what I can say is that we will see in the future. Perhaps, I develop, spread, expand, and flourish my idea. I just want to see a better future for architects. I have written even an article about this issue. Architects need to make radical changes in their future. Thank your collaboration.  

piero1910
May 18, 11 10:02 pm

I forgot to to write. I think that architects have to find an economical change by themselves. They should become more independents, and their job should be more autonomous. 

timothysadler®
May 18, 11 11:36 pm

"what the fuck, you architects swim in a fucking ocean of liability all day..."

 

Yes.  And drown in it too sometimes. 

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