architecture blog

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?

From news reports to personal experiences, we are all now very aware that the real estate world has cooled dramatically, however, the dip in property price and increase in foreclosures has brought about a new round of opportunity. Those who are willing and able to gobble up these affordable properties are in a good position to reap the benefits in the long run. Unfortunately, however, in the last few years, we've seen plenty of mistakes in buying property that could have been avoided with a bit of help from an architect.

Utilize an Architect's Experience

People often falsely assume that they must own a property before contacting an architect. This can be a difficult error to overcome. Architects have experience in understanding zoning codes that affect the value and buildability of the property.

But My Broker Told Me...

There are many great real estate brokers out there, but there are also many not so good. Remember that a broker's end goal is to sell you a property and collect a commission. This often leads to giving you the most favorable view of a property in hopes that you'll close the deal quick and easy. Most brokers will do a very superficial code search on a property, but the problem is that zoning codes are not always so simple, nor are they the only factor in determining the development value of a property.

Beyond the Codes

Although a thorough zoning code check is an important first step, architects have experience beyond just an understanding of the codes. They can typically give you a quick idea of what the site will allow based on other factors or costs.

To give you a better feel of some potential pitfalls, let's look at a few examples that we've experienced:

Client Scenario A - Parking Counts

A few years back we had a young client named Greg come to us with a property in Los Angeles that was zoned RD2 (a  multi-family zone). Greg had already purchased this property under the assumption from his real estate agent that he could develop a four-unit condominium on the property.

In theory this was correct. The RD2 zone allowed a density of one unit for every 2,000 square feet of property and the property was 8,500 square feet in size. So yes, the code allowed four units, but there were other factors at play. The configuration of the lot, and the city's parking requirements made it impossible to properly park a four unit condo on the site. Although it may have worked with underground parking, the cost of going underground given the size and layout of the lot would have made the project infeasible.

So after analyzing all of this for Greg, we determined at most he could do a three-unit condominium. The development numbers didn't add up, so Greg had just purchased a property that was of little value to him. If he had contacted us sooner, we could have warned him and he could have found a better suited property or negotiated the price of that property down until it made financial sense.

Client Scenario B - Hillside

In Los Angeles, the search for cheap lands often leads to the hills. Not the glamorous cliff hanging homes one thinks of, but leftover raw land with severe slopes. A young couple, Claire and Sam  came to us a while back with one of these lots in mind. Their broker brought this property to their attention because it was cheap and had nothing built on it yet. To Claire and Sam it seemed like a dream property. The cheap land would allow them to build the small modern home they had been dreaming of.

Fortunately, Claire and Sam called us when they found this property. Aside from not meeting code requirements to build what they wanted, we explained to them that the added foundation costs to build on an unstable hill like this far outweighed the potential savings of the cheap land. Needless to say, they didn't purchase this particular hillside mess. We like to think that our quick advice saved them from this big financial mistake.

Free Research by an Architect

Not all scenarios are like this. These two just highlight some potential mistakes that can be made without getting an architect's help early in the process.

To help prevent some of these property purchasing pitfalls, we have added a free zoning code search to our web site. This service is available to current property owners and people searching for property in the Los Angeles area. Learning about a property's zoning code is an important first step in any potential project. A step that we are trying to make a little easier and more accessible.

Sometimes approaching an architect can be intimidating since few people have experience in dealing with them. Well, now asking an architect is easy. If you have a question for an architect, here are three easy ways to ask:

1. Form

Click here to fill out a confidential form. An architect will reply with an answer to the e-mail address you provide.

2. Phone

Call 310.526.7826. Ask for Derek or dial extension 01.

3. Comment

Ask a question by commenting in the forum below. Comments are monitored and can take 1-2 business days to be posted. Questions are typically answered within 1-5 business days, so check back here for the answer.

Please no questions involving structural engineering, ie. foundation, beam and column sizing. We will not answer these types of questions. If you have a structural question, please contact a structural engineer in your area. 

So, whether you have a question about a project you're considering, or just researching the architecture profession, there are no stupid questions. Ask away.

If you've spent any time perusing architect's websites, you'll probably notice one common theme: architects like talking about themselves and their projects. Does this mean architect's are self centered ego maniacs? Well...long pause...not necessarily. Architects, like most businesses, are somewhat obligated to tell you about themselves; show you their work, and give you a feel for if they are the right firm for you.

Unfortunatly, all this "selfish" architect behavior has left us with a world wide web that is pretty void of honest useful advice for all the non-architects out there(ie. our potential clients.) Most people have the feeling that in order to get an architect's help one must hire them first.This approach seems a bit suspect, since few people, have any experience in hiring architects or understanding what it takes to start a project.

So we have to ask ourselves, does all this uncertainty make people want to hire an architect?

The answer: Not really.

This unfortunate reallity has caused us to make a bit of a change to our site here at Modative. A shift away from architecture website norm.

Yes, our site will still mostly be about US with images of projects, profiles of the partners, and a bit about firm philosophy. However, we have added a new section called resources that is dedicated to YOU, our current and (hopefully) future clients. Our hope is that this section will help alleviate some of the uncertainty associated with starting a building project and deciding on an architect. New free resources for non-architects will be added in the coming months that will be available to anyone with a computer and internet access.

An architect's website about you. How's that for some out of the box thinking?