architecture blog

Architects Answering the Important Questions

Posted by Christian Navar on Tue, Sep 7, 2010 @ 06:09 AM

People often contact Modative about a project they have in mind, but they are often unsure of how to get started. Common questions we receive are:

  • How much will it cost?
  • What will the city allow us to do?
  • How much square footage can I build?
  • Is it feasible?
  • How many units can I build?
  • How much parking do I need to provide?
  • What is the process?
  • How long will it take to permit or build?
  • I have a lot / want to buy a lot / want to lease a property. What can I do with it?

Modative was recently contacted by two individuals who posed many of the questions listed above. The first individual was a long-time business owner with a hard-to-lease commercial auto body shop in Los Angeles. The second was a young entrepreneur looking to find a property in order to open a new restaurant/bar concept. With both of these clients, their long term plans were contingent upon taking really important first steps to decide what to do with the property they own/lease/were looking to purchase or lease.

los angeles bar architect

Our services often include conceptual renderings like this one for the aforementioned restaurant/bar in Los Angeles. These renderings are valuable tools for our clients (and their investors) to envision the project's possibilities.

Since the economic climate has shifted downward so dramatically, more and more of our clients are requesting that we provide answers to important questions in order to guide them in the decision-making process before they spend too much of their cash reserves. In our ongoing efforts to give people insight into the helpful services we provide here at Modative, we’d like to share a service in which several of our recent clients have had a particular interest: Site Evaluation and Planning Services.

The beauty of our Site Evaluation and Planning Services is that within a few weeks, for a smaller financial commitment, we can provide valuable insight into what can be done with a property. The level of detail provided in our analysis is catered to the clients specific needs. Some just want the basics, like of what uses are allowed and the code restraints, while others want a more detailed investigation, like program development, preliminary layouts, conceptual renderings, and even preliminary budget analysis of construction and soft costs (architectural, consultants and city fees).

los angeles office rehab architect

A descriptive 3D Plan we provided as part of the Site Evaluation and Planning Services for an auto body shop conversion into office commercial.

While we frequently provide these services for ground-up projects such as Residential Small Lot Subdivision projects, we also do quite a few for residential and commercial rehab and remodel projects.

Check out our Site Evaluation and Planning Services page to download a sample report we developed for a commercial rehab project and learn more about how these services are a great way to get a project started without a huge upfront commitment.

 

Download a sample Site Evaluation and Planning report:

site evaluation  

Site Evaluation + Planning Services

A sample case study of a commercial rehab and former auto body shop in North Hollywood, California.

 

Contributors to this post include Derek Leavitt, AIA, Michael Scott and Krystal Návar.

Tags: Los Angeles, architect advice, Zoning Code Search, Architectual Practice, architecture resorces, Residential, Small Lot Subdivision, Development

7 Tips for Starting an Architecture Firm - Tip 04: Learn from the Bad

Posted by Derek Leavitt on Fri, Jan 22, 2010 @ 06:01 AM

This post is part of the How to Start an Architecture Firm series.

In February 2006, the three of us went to work on forming our own architecture firm. The following is tip number four of seven in our start-up strategy.

Tip 04: Learn From The Bad

architects can learn from the bad

photo credit

As every aspiring architect leaves school, they are faced with an important decision, "Where should I work?" This is a tough decision. Go work for a big corporate firm and risk getting stuck on one project for several years or go for a small design-oriented firm and miss out on some of the business savvy of a larger firm? 

Although this is an obvious over-simplification of architecture firm types, many young professionals fret over this decision.

When I graduated from USC, Michael (fellow Modative partner) and I went to work for a medium-sized (8-15 people) sized firm in Santa Monica, CA called David Jay Flood Architect. My experience at this firm was invaluable. I was given a high level of responsibility managing large projects at a young age. I did a lot of learning on the job.

After three years at that firm, I moved on, working for two more firms before founding Modative with Michael and Christian in 2006. In my time working for other people I learned plenty of good architecture industry practices, but I also learned a lot of what not to do. I call this "learning from the bad."

So while my experience involved working for small- and medium-sized firms, I've come to realize that the type of firm(s) you work for is less relevant than what you gain from the experience. Learning from the bad is a big part of this. Learning what to do and what not to do are inextricably tied. If you never give yourself the opportunity to learn what not to do by watching other people work, you're more likely to make those mistakes when you're running your own firm

Whether you don't like the way your boss manages projects or you made a big mistake on a set of plans, you will no doubt encounter  plenty of negative situations working for others. These bad experiences are invaluable when you decide to start your own firm.  File them away for when you're the boss and have to decide how to run your firm.

So, when the time comes to start your firm, will you make the same mistakes or will you learn from the bad?


Stay tuned over the next several weeks as we fill in the last three tips of our 7 Tips for Starting an Architecture Firm.
los angeles modern architecture firm

7 Tips for Starting an Architecture Firm

00 architect firm

00 Bootstrapping

Not a tip, but a critical theme in our start-up adventure.

posted 12.03.09

01 architect firm

01 Be Cheap

posted 12.08.09

02 architect firm

02 DIY (Do It Yourself)

posted 12.18.09 

 
03 architect firm

03 Get Advice

posted 12.22.09

04 architect firm

04 Learn from the Bad

posted 01.22.10 

05 architect firm

05 Start and Stay Small

posted 03.03.10 

06 architect firm

06 Stay Flexible

posted 04.05.10
07 architect firm

07 Plan It Out

posted 03.13.12

Want to stay up to date as we post the 7 Tips to Starting an Architecture Firm?  Subscribe to this blog by adding your email to the subscribe form on the right. 

Tags: Los Angeles, los angeles architects, architect advice, Architectual Practice, Starting an architecture firm

7 Tips for Starting an Architecture Firm - Tip 03: Get Advice

Posted by Derek Leavitt on Tue, Dec 22, 2009 @ 08:12 AM

This post is part of the How to Start an Architecture Firm series.

In February 2006, the three of us went to work on forming our own architecture firm. The following is tip number three of seven in our start-up strategy.

Tip 03: Get Advice

Architects get advice

photo credit

 

After nearly four years in business, I can say with great certainty that we wouldn't have survived more than a year without getting great advice from some key people. 

Asking for advice is easy. People love to give advice and share their success stories.

Our advice came from the following four groups:

1. Family

Aside from getting your family on board with the idea of you going out on your own, you should also get their advice. There's a good chance that at least one person in your family has started their own business.

2. Friends

While we received great business advice from many of our friends, there are two in particular that stand out:

Sam

Sam is an entrepreneur. The three of us went to USC with Sam. And while we were drawing and building models over in architecture school, Sam was in business school learning to be an entrepreneur. Actually, Sam had always been an entrepreneur. It's in his blood. There's a rumor that as a child, he outsourced his chores to other kids in the neighborhood, maintaining a cut for himself. When his Mom found out, she was too proud to punish him.

architects entrepreneurship advice Sam will likely kill me for profiling him on our blog.

By the time we formed Modative, Sam was on his third business start-up. He advised us to be cheap (see Tip 01)  and to do much of the start-up work ourselves (see Tip 02), such as forming our own corporation. Sam also got us started on internet advertising years before the bulk of the architecture industry caught on.

The fact that Sam is not an architect was actually an asset. He taught us to question norms within the industry. Sam continues to push us today. 


Jon

Jon is another good friend from USC. Jon is a lawyer. He lives in Northern California.

While in Tip 02: DIY, I recommended to avoid hiring a lawyer, as our business grew, we found ourselves needing legal advice on contracts and other minor items. Instead of hiring an attorney, we've asked Jon for advice. In return for his help, he always has a place to stay when he frequently visits Los Angeles. And when the time comes for Jon to build his own house, he'll cash in all those favors.

If you'd like Jon to be your lawyer, he can be found here - Tingley Piontkowski LLP

Jon will probably also be less than pleased that I've profiled him on our blog. Now we'll need a new lawyer friend to defend us in a lawsuit from our first lawyer friend.

 

architects advice friends

3. Network

Guessing and gut instinct are not good business strategies. Finding an expert or someone who's been there before will dramatically increase your rate of success. Beyond your family and close friends, there's a network of people that can help you with just about anything.

Need advice on web design? Chances are you know, or your friends know, someone that is a master web designer.

4. Competitors

Overall, I would say that the architecture industry is pretty amicable. Advice flows freely. We used this to our advantage early on, meeting with established architects that would later become our competitors. The idea was not to steal from them, but to learn from them.

Since then, we've met with numerous younger professionals trying to start their own firms. We share with them (and now you) like other firms shared with us, knowing full well that they might become our competitors in the future. A full circle of idea sharing.

 

Stay tuned over the next several weeks as we fill in the last four tips of our 7 Tips for Starting an Architecture Firm.

los angeles modern architecture firm

7 Tips for Starting an Architecture Firm

00 architect firm

00 Bootstrapping

Not a tip, but a critical theme in our start-up adventure.

posted 12.03.09

01 architect firm

01 Be Cheap

posted 12.08.09

02 architect firm

02 DIY (Do It Yourself)

posted 12.18.09 

 
03 architect firm

03 Get Advice

posted 12.22.09

04 architect firm

04 Learn from the Bad

posted 01.22.10  

05 architect firm

05 Start and Stay Small

posted 03.03.10 

06 architect firm

06 Stay Flexible

posted 04.05.10

07 architect firm

07 Plan It Out

posted 03.13.12

Want to stay up to date as we post the 7 Tips to Starting an Architecture Firm?  Subscribe to this blog by adding your email to the subscribe form on the right.

Tags: Los Angeles, los angeles architects, architect advice, Architectual Practice, Starting an architecture firm

7 Tips for Starting an Architecture Firm - Tip 02: DIY

Posted by Derek Leavitt on Fri, Dec 18, 2009 @ 09:12 AM

This post is tip number two of seven in our How to Start an Architecture Firm series, a look into Modative's founding in 2006.

Tip 02: DIY (Do It Yourself)

architects do it yourself

photo credit

During our architecture firm start-up, one of the ways were able to be cheap was to do almost everything ourselves. Here are five key things that we did ourselves in order to save money:

1. Filing a Corporation

Lawyers are expensive. And, unfortunately, many people feel they must hire one in order to start a business. This is simply not true.

Setting up a business structure is actually quite easy to do yourself. There are numerous affordable resources to help you avoid hefty legal fees. There's the online legal document service, legal zoomthat can help you set up your firm's business structure for a few hundred dollars. Modative, however, went an even cheaper route and purchased a do-it-yourself book (pictured right) from Nolo at the local book store. The book comes with a CD-ROM that has all of the templates you'll need in MS Word format.

architecture corporation filing

Even if you're not sure which business legal structure is right for you: Corporation, Partnership or LLC, Nolo has books to help you decide. Just remember that every state is a bit different and some states don't permit certain legal structures for architecture firms.

If you have partners, you'll also need to set up a business buyout agreement, also known as a "business prenup".

So now that you know how easy and cheap it is to set up a proper business structure, there are no excuses not to do it. Not going through this simple process is a huge liability, especially in the architecture field.


2. Company Graphics

This is probably a no-brainer for most architects. We are designers after all. Now is your chance to use those non-architecture design skills to help build your business brand with graphics.

Here at Modative, we did, and continue to do all of our own graphics, from business cards to marketing materials. Oh, and yes, we like orange.

Though this process, we also learned that we enjoy doing graphics so much that Modative now offers these services to our clients.

 

 

 

 architects business cards
 

3. Website

modern architects website sample

In line with doing your own graphics, there's never been an easier time to make your own website. We created and maintain our own website without any programming knowledge. Many architects tend to over-complicate their websites with outsourced, fancy flash sites, when a simple do-it-yourself HTML site is easier for potential clients to navigate.

 

4. Architecture Grunt Work

Anyone with professional experience in the architecture field knows that there's plenty of grunt work to go around. Starting your own firm will place all of this undesirable work at your feet. If you want to keep your firm financially viable at the start, hiring staff should be your last resort.

To minimize architecture-related grunt work, we implemented ArchiCADas our CAD software. Since all three partners had used it before and even owned a few copies, it was the logical choice. Besides, BIM (Building Information Modeling) programs such as ArchiCADenable small teams of experienced users to accomplish a lot of work with much less of the grunt work associated with (old technology) 2D CAD programs.

archicad architects BIM

The above example shows how our software enables us to efficiently generate easy-to-read 3D drawings and technical 2D drawings within the same program. This leads to more time for design, less time on grunt work.

 

5. Office Improvements

Since our founding office in Michael's basement, we've moved our office several times (more on this in Tip 06). In a few of these moves, we've had to improve less-than-desirable spaces to make them usable for us and presentable to our clients. Without funds to hire a construction crew, we were left to do the labor ourselves.

architects construction

In our third office space, we took a break from architecture to do a little construction and painting. The image above (left) is of me in full gear, ready for some paint spray gun action. Above right is a feature wall that Michael and Christian constructed in that same office.

 

Although the do-it-yourself approach can be testing at times, it allowed us to acquire new skills and learn from these often rewarding experiences.

Stay tuned over the next several weeks as we fill in the last five tips of our 7 Tips for Starting an Architecture Firm

los angeles modern architecture firm

7 Tips for Starting an Architecture Firm

00 architect firm

00 Bootstrapping

Not a tip, but a critical theme in our start-up adventure.

posted 12.03.09

01 architect firm

01 Be Cheap

posted 12.08.09

02 architect firm

02 DIY (Do It Yourself)

posted 12.18.09 

 
03 architect firm

03 Get Advice

posted 12.22.09

04 architect firm

 

04 Learn from the Bad

posted 01.22.10  

05 architect firm

05 Start and Stay Small

posted 03.03.10 

06 architect firm

06 Stay Flexible

posted 04.05.10
07 architect firm

07 Plan It Out

posted 03.13.12

Want to stay up to date as we post the 7 Tips to Starting an Architecture Firm?  Subscribe to this blog by adding your email to the subscribe form on the right.

Tags: Los Angeles, los angeles architects, architect advice, Architectual Practice, Starting an architecture firm

7 Tips for Starting an Architecture Firm - Tip 01: Be Cheap

Posted by Derek Leavitt on Tue, Dec 8, 2009 @ 09:12 AM

This post is part of the How to Start an Architecture Firm series.

In February 2006, three guys in their late 20's quit their day jobs and went to work on forming their own architecture firm. The following is tip number one of seven in their start-up strategy.

Tip 01: Be Cheap

architects be cheap

photo credit

How much money do you think it requires to start an architecture firm?

Most people would probably guess in the tens of thousands of dollars or more. This certainly was not the case with Modative. We began with $500 per partner: $500 that was more of a formality to purchase our company stock.

architecture firm start-up costs

So how is this possible?

For starters, our first office wasn't really an office, but Michael's basement in suburban Pasadena, CA. Needless to say, it was rent-free. And although it was a 16-step commute for Michael, Christian and I had long traffic-filled drives from Los Angeles's west side.

basement architects office

As you can see, we had some decent equipment. But we didn't buy anything except for a few ikea desks, chairs and some minimal office supplies. We used the computers, printers and software we already used personally or could scrounge up from relatives (Thanks Dad).

Our goal was to never spend money we didn't have. Although we had a few (low-limit) company credit cards, we kept expenses light. This was especially critical because we started the firm without any projects or other sources of revenue.

After a few months, Modative's first project came about as an independent consultanting job for a friend's father's architecture firm.

architects first project

The project (above) was a ground-up office and warehouse for a tile manufacturer. It wasn't the most glamorous project, but it was essential to helping us build some momentum as a real business.

 

One of the other ways we were able to be cheap will be revealed in the forthcoming Tip 02.

Stay tuned over the next several weeks as we fill in the blanks on our 7 Tips for Starting an Architecture Firm.

los angeles modern architecture firm

7 Tips for Starting an Architecture Firm

00 architect firm

00 Bootstrapping

Not a tip, but a critical theme in our start-up adventure.

posted 12.03.09

01 architect firm

01 Be Cheap

posted 12.08.09

02 architect firm

02 DIY - Do It Yourself

posted 12.18.09 

03 architect firm

03 Get Advice

posted 12.22.09
04 architect firm

 

04 Learn from the Bad

posted 01.22.10  

05 architect firm

05 Start and Stay Small

posted 03.03.10 

06 architect firm

06 Stay Flexible

posted 04.05.10
07 architect firm

07 Plan It Out

posted 03.13.12

 

Want to stay up to date as we post the 7 Tips to Starting an Architecture Firm?  Subscribe to this blog by adding your email to the subscribe form on the right. We never spam our fine followers and if later on discover you're completely over us, you can easily unsubscribe.

Tags: Los Angeles, los angeles architects, architect advice, Architectual Practice, Starting an architecture firm

How to Start an Architecture Firm - Introduction

Posted by Derek Leavitt on Thu, Dec 3, 2009 @ 08:12 AM

As many architects continue to struggle to find employment, some are deciding that the only way to get back into the game is to start their own firms. For this reason, I thought it'd be an appropriate time to share the story of how Michael, Christian and I founded Modative back in 2006.

modern architect foundersModative's founders, February 2006, at the Disney Concert Hall in Los Angeles celebrating at the end of our last day working for other people.

 

In the last few years, we've lectured a few times at USC's School of Architecture and the Urban Land Institute (ULI)on how to start an architecture firm. The lecture has improved a bit with each iteration, to the point where I feel it's now worth posting. Enjoy.

 

What is Entrepreneurship, Really?

Starting your own firm is really more about being a good entrepreneur than being a good architect. And since most architects have little education or experience with entrepreneurship, they often make the following false assumptions about what it will be like to have their own firm.

Entrepreneurship Misconceptions

Our goal is to tell our start-up story - the unglamorous version. And while it won't apply to everyone looking to start their own firm, there are some key lessons for inexperienced entrepreneurs (like we were) looking to make their move.

 

Bootstrapping

Even though we didn't know it at the time, our approach to starting our firm was very much in line with what is known in the business community as bootstrapping.

You may be familiar with the saying, "Pull yourself up by your bootstraps". As it refers to business, bootstrapping is starting a business venture without external help and/or money.

Our seven tips for starting an architecture firm will cover how we bootstrapped our way from being three inexperienced entrepreneurs to three owners of a (nearly) four-year-old architecture firm.

bootstrapping architect start upimage source

7 Tips to Starting an Architecture Firm

Following this introduction post, our story will be organized into seven key tips for starting an architecture (or any other creative) firm. See the graphic below for hints as to what each of those seven tips will be.

Stay tuned over the next several weeks as we fill in the blanks on our 7 Tips for Starting an Architecture Firm.

los angeles modern architecture firm

7 Tips for Starting an Architecture Firm

00 architect firm

00 Bootstrapping

Not a tip, but a critical theme in our start-up adventure.

01 architect firm

01 Be Cheap

posted 12.08.09

02 architect firm

02 DIY - Do It Yourself

posted 12.18.09   
03 architect firm

03 Get Advice

posted 12.22.09
04 architect firm

 

04 Learn from the Bad

posted 01.22.10  

05 architect firm

05 Start and Stay Small

posted 03.03.10 

06 architect firm

06 Stay Flexible

posted 04.05.10
07 architect firm

07 Plan It Out

posted 03.13.12

Side Note: As an experiment, the images for each tip above were selected by typing the tip phrase (e.g., bootstrapping) into google images and selecting the most appropriate image from the first page. I think the experiment garnered some interesting results.

google images experiment

 

Want to stay up to date as we post the 7 Tips to Starting an Architecture Firm?  Subscribe to this blog by adding your email to the subscribe form on the right. We never spam our fine followers and if later on you discover you hate our guts, you can always unsubscribe.

Tags: los angeles architects, architect advice, Architectual Practice, Business, architecture resorces, Starting an architecture firm

Architects & Creative Professionals : Is It Time To Rethink Your Resume?

Posted by Derek Leavitt on Mon, May 18, 2009 @ 09:05 AM

Over the past few months I've been thinking a lot about resumes. Actually, I haven't just been thinking. I've been writing a guide to attempt to get architects and other creative professionals to rethink the way they make resumes.

The guide is formatted as 22 quick tips to get you to rethink your resume in your own creative way.

Check out Rethink Your Resume

rethink your resume

Tags: Inspiration, architect advice, Architectual Practice, architecture resorces, resume

Five Ways to Keep Your Architect in Check

Posted by Derek Leavitt on Fri, Apr 10, 2009 @ 09:04 AM

Architects are not perfect. They need your help from time to time. Schedule delays and budget overruns can happen on any project. And while it may not be your architect's fault, here are five easy ways to help keep your architect in check:

1. Detailed Contract

Many architects fear detailed contracts because they think it'll deter clients from hiring them. This approach hurts everyone, especially the owner/client. Contracts are not just about architecture fees. A good contract covers all the bases. For example, responsibilities of the various parties and what happens if things go wrong.

Here at Modative, we primarily use the AIA (American Institute of Architects) standard set of agreements. They are lengthy, detailed and a boring read, but they're based on over 120 years of knowledge.

Doing a project is serious business. If you're afraid of a detailed contract then maybe you should reconsider building something.

2. Read It Again

Be sure to re-read that detailed contract throughout the architecture process. This is a good way to know if your architect is delivering as promised.

3. Schedule Monitoring

It's easy to get off schedule when there is no schedule. Your architect should provide you a preliminary schedule at the beginning of the project and update it every few months as things will no doubt change.

Set meetings in advance, so time doesn't slip away. A great approach is to pick a standing day/time and stick to it. We'll meet every third Friday at 3 p.m. Maybe you could even grab cocktails after?

4. Budget Management

In case you haven't heard, architects are not construction pricing experts. They're just not. Architects don't have a grasp on the labor and materials markets like a general contractor does. Either bring your contractor onto the team early or hire one at key moments in the architecture process to price out your design. This is money well spent. Getting too far in the process with an over-budget design can be costly and confrontational to fix.

5. Phase Sign-offs

Architecture phases exist for a reason - to help monitor progress. Get a clear sense from your architect as to when one phase begins and the other ends. A great way to achieve this is through sign-offs. As the owner, you should sign a set of plans/documents to signify design approval at the end of every phase.

Checking this list and giving your architect a little friendly nudge from time to time will help keep things moving along.

Am I being too hard on my own profession?

Tags: architect advice, Organization, Architectual Practice, Business, architecture resources, contracts

Advice for Architecture Job Hunters

Posted by Derek Leavitt on Mon, Mar 23, 2009 @ 11:03 AM

Last week we had an interesting question posted to our Ask an Architect feature about the difficulty in finding an architecture job. I thought this Q & A would be helpful to other architecture job seekers out there, especially the less experienced, so here is a reposting of that question and answer.

The Question


How hard, on a scale of 1-10, is it to get a job right after graduating with a Bachelors in Architecture?

The Answer


Good question. A lot of new architecture graduates and young professionals are facing this same issue right now. I wish I had better news, but I don't. Things are tough right now for architecture job seekers. If you want a scale, I would say an 8 in terms of difficulty. Many firms are letting people go or on hiring freeze.
 
However, I'm an optimist, so lets look at some positives given your situation.
 

You Cost Less

Because you are less experienced, you cost less to a potential employer. This means that hiring you is less of a financial commitment versus hiring a licensed architect or someone with 5+ years of experience.
 

You Are Young (I'm Assuming)

Now is a bad time to enter the job market, but things could be worse. You could have just been laid off as an experienced architect with kids, a mortgage, etc. Hopefully you are light on expenses and responsibilities. This gives you flexibility. You could work in another city or overseas where the economy may be better. You may also consider going for a masters, maybe not even in architecture (I recommend an MBA).
 

Part Time

Although many firms are hesitating to hire because of uncertainty, many still have work that needs to be done. You could offer yourself up for some part time work. Tell them no commitment, just by the hour. This is a great way to get in. Before you know it, they could get busier, and they'll turn to you first for a full time job.
 

Freelance

Even less of a commitment for a firm would be to offer yourself as a freelancer. You just need your own computer, software, and a place to work (probably home). Many firms love to outsource because they avoid the commitment and costs of an employee, but still have a place to get work done when they get busy. This may not be ideal for you, but given these hard times, it is a viable option that many people don't consider.
 

New Skills

Recent graduates often have better computer skills than professionals just a few years older. Use this to your advantage. Maybe you even have computer skills outside of architecture, like web design. Many firms utilize down time to redesign websites or reorganize themselves. Show that you can do more than just CAD.
 
Hopefully this gives you a glimmer of hope. Also keep checking back on our web site as we'll be releasing a guide to creative resumes in the coming months. Good luck out there.  

Tags: architect advice, Architectual Practice, architecture resorces, architecture job search

The Good & Bad of Starting a Building Project Now

Posted by Derek Leavitt on Tue, Mar 17, 2009 @ 09:03 AM

So, is now a good time to start a building project? While it is a scary time, there are opportunities abound for those that have the courage and means. I am no fortune teller, but I can dish out a bit of what I've heard and experienced in the last few months. Of course I'll also throw in some invaluable gut intuition.

The Bad

  • Banks - Lending is tight. Really tight. As a banker recently told me, "our current appetite for lending is small." He went on to say that the easiest type of loan to get these days is for an owner occupied building. That is their way of saying if you're building it for yourself to occupy (a home, remodel or commercial building) and you qualify, you may have some of their money.
  • Uncertainty - The development attitude in the recent boom was build it and they will come. This is not the case anymore. You have to be careful what you build, for whom, and at what cost.

The Good

  • Cheap Land - The price of land seems to be back to where it needs to be to make development projects work again. People assumed that the ever escalating price of new homes and condos was all developer greed. It was not. High land prices and construction costs dictated high sales prices.
  • Foreclosures - OK, foreclosures are bad. Someone loses, banks fail. This is one of the main reasons we got into this mess, right? I get it. Now for the bright side. Foreclosures can be opportunities. The cheap real estate they offer allows for new opportunities - a quick condo flip, land for your new home, the chance to develop a small project, etc.
  • Cheaper Construction - The price of materials and labor have fallen due to demand reductions. Almost all material prices have been in decline since the summer of '08. Contractors are hurting. Less work for them means they will take on projects for smaller overhead and profit percentages. Quality contractors are also taking on smaller jobs that they wouldn't touch a few years back.
  • Cheaper Soft Costs - It pains me as I write this, but the bad market has also lowered the costs of architects, engineers and all the other people that get you to the point of construction and beyond. Why? They are also hurting.
  • Faster Permitting - We do a fair amount of architecture work in Los Angeles, and the difference at City Hall these days is astounding. What used to be a four hour wait to submit for plan check is now a four minute wait. In our experience, their processing times are much faster as well.
  • Time - Time is the typically bane of the architect and owner's existence. Building projects take time. They have to be designed, coordinated with consultants, documented and permitted. All this adds up to a long process that can be quite burdensome. Now, however, this time factor can help with some of our major negatives. Banks will start lending again. The market will recover. So when you think of a building project, think about the time involved. Many projects take about a year to get to permit/construction start (when you need that construction loan), then the construction can take another year (when you move in or need those prospective buyers.) So ask yourself where you think things will be in one to two years.
  • Emerging Trends - Major slowdowns are often times of reflection and change. This is very true in the building biz. Of late, I've seen a strong desire for smaller, more efficient, green buildings. This trend comes both from awareness of climate change and our financial need to do more with less. I like this trend and think that it'll bring about some very innovative and evolved projects.

 

Do you have any thoughts on this? Questions?

Tags: real estate, architect advice, Development, economy, Green, Condos