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Recession & Recovery

Is Now a Good Time to Start Your Own Studio?

Architects discuss the pros and cons of self-employment during an economic downturn.

By William Bostwick

How does Ginseng Chicken, a young architecture studio, save money in the recession? “You’re sitting on it,” says Sang Hwa Lee, 31, pointing to a futon against the wall of a modest room on the 22nd floor of an apartment tower near Battery Park, at the tip of Manhattan. This is Ginseng Chicken’s office. To Lee’s business partner, Hosung Chun, it also is home.

Ginseng Chicken
Photo courtesy Ginseng Chicken
Sang Hwa Lee, Hosung Chun, and Jeeyong An, started their New York-based studio, Ginseng Chicken, last summer.
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Last summer, as the economy spiraled downward, Lee founded the studio with two former classmates, Chun and Jeeyong An, AIA. They’re crazy, right? “No one ever calls us that straight up,” Lee says. “But I’m sure they have their doubts.”

Sure they do: Starting a studio these days is like getting in on the ground floor of a building that is being evacuated. As work dries up both in the U.S. and abroad, firms are chasing projects they wouldn’t have considered previously. Pre-proposals that might have elicited 20 applicants are now drawing 100, says Michael Strogoff, AIA, a California-based management consultant and chair of the advisory group for the AIA Practice Management Knowledge Community. “Firms are celebrating $10,000 commissions that used to celebrate $100,000 commissions,” he says. Given the competitive market, he says, now is “not an ideal time to be starting your own practice.”

Still, it can be done. Several notable firms started during the financially challenged 1970s, including Steven Holl Architects (1976), Pelli Clarke Pelli (1977), and FXFOWLE (1978). Then there are giants like Microsoft and Disney, both founded during economic downturns. In fact, when the recession hit in 1991, self-employment rose to an all-time high of 7.7 percent. A recession, if you can believe it, actually has its benefits. If you are starting a business, a recession’s high rate of unemployment means wages fall—people are willing to work for less. Also, architects are willing to work on riskier propositions, such as competitions and RFPs.

Saundra Little, AIA, is a partner at Centric Design Studio, a Detroit-based studio she started in 2002 as an LLC (to enter a design competition) while working full-time at a larger firm. When she was laid off last fall, she and a colleague decided to turn the LLC into a full-fledged firm. They have three partners now, and nine other contract employees, most of whom recently lost jobs elsewhere. Lately, it’s been easy to find top talent, she says. “A number of team members we put together are people we know, and we know they’re good, but in another time we’d have to have a good project in hand to tempt them,” she says. “Now, we’re all in the same boat—everybody’s ready to go.” Centric is mostly going after government commissions, hoping for a stimulus bill construction boost, but those aren’t the only projects out there for young firms.

Take it from someone who knows. Mark Strauss, FAIA, principal at FXFOWLE, started his own firm in 1990s, then merged with FXFOWLE in 2000. He says that to stay in the game, you have to play midfield, ready for anything. “In the early ’90s,” he says, “FXFOWLE went from 150 to 50 people in one year, because the firm was only involved with one building type and one kind of developer: commercial office buildings.” Of course, it’s hard when you are just starting to diversify, but you can be strategic. “Go where the money is,” Strauss says.

With a hopeful eye on Washington’s coffers, he recommends infrastructure and sustainable-design projects. Planning work is a good bet too, he says, as developers take an economic slowdown as a chance to set up future projects. His former firm focused on planning; that’s what made it attractive to FXFOWLE.

Surprisingly, residential work is still out there. “Homeowners are looking for a good deal, and construction’s cheaper,” says Georgio Lostao of Ridiculous Design. Lostao founded Ridiculous with his wife Claudine after their previous employer, Sienna Architecture Co., in Portland, Oregon, shut down in January. They hung onto some of Sienna’s corporate clients, but with most of those projects on hold, they’ve been doing a lot of home renovations and additions.

“Since people can’t sell their houses, or are afraid of losing money on them, they’re investing in the house,” Claudine says. The attitude being: if you have the dough, spend it now. With that market in sight, Ridiculous Design started what they call a “house-in-a-bag” service that provides consulting and design work for well-heeled homeowners.

“That’s the best market for us right now too,” Chun agrees. Ginseng Chicken is working on a few homes in California, a restaurant, a consulting gig in China, and an exhibition in Brooklyn—all of this from three laptops and a desk. Space is tight, but it will pay off. “There’s an art to cutting overhead, and it’ll help when we’re an established firm,” Lee says. “It’s a student mentality: just survival.”

Jenna M. McKnight contributed additional reporting for this story.

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In McGraw-Hill Construction’s Economic Stimulus Plan special section: Browse comprehensive resources related to the U.S. economic stimulus plan and read additional coverage from BusinessWeek, ENR, and other publications.
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