A recession is looming. Firms should invest in their staff and client relationships as well as embracing change, writes Andrew Teacher

Andrew Teacher_cropped

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Andrew Teacher

What have the Tory leadership battle, NASA’s space programme and the FBI’s Mar-a-Lago raid all got in common? Each represents a so-far futile search for intelligent life.

But, regardless of how smart you are, amid the political and professional chaos that we have all experienced over recent years, the worsening economy presents the biggest challenge that many will face.

I sometimes lose track of my age when making musical references to my team (before working in government and for the British Property Federation, I began my career at the NME), the youngest of whom are half my age. But, while not having first-hand experience of a band gives you a chance to delve in without the hype, not having lived through a recession poses significant problems.

And not just for architects: the entire ecosystem of finance, development and construction is filled with people who barely remember 2008, let alone the 1990s when interest rates last increased at the rate they have done in August.

So, what to do? There are five things that I would suggest.

First, be clear about your purpose. Not in a fluffy, woke “elevating the world’s consciousness” type of way. But in a practical way. What are you trying to achieve, for whom and at what price points?

Being clear about your product or service – and ensuring that your team is too – can avoid wasting time and money. Having set up three businesses, exited two and advised hundreds, I can say first-hand that this is something all firms struggle with sometimes.

Second, don’t be afraid to pivot. Responding to where your clients are headed is key. Don’t let an ideological attachment to doing one or two things stop you from seizing a commercial opportunity.

For instance, the relaxation of certain planning rules (Class E) makes mashing up uses on high streets easier – potentially creating opportunities to design different spaces. Many secondary or tertiary offices will be lying un-let soon, creating opportunities – primarily around flexible working – to reposition tired assets.

Third, embrace technology. As an advocate for modular housing, I still see pushback from architects when they should be embracing change and working with innovators. Many wrongly see threats instead of opportunities. Photoshop did not stop people from selling pencils.

Fourth, and you would expect me to say this, as someone who advises companies on fundraising and business development: invest now in marketing and winning new work. So many firms waste tons of money pumping out cliched nonsense when they could be celebrating their clients’ successes and promoting ways to solve societal problems. But be focused. Inspire and entertain people – don’t bore them with jargon.

Finally, and most importantly, continue to invest in your people. I saw a lot of practices cull staff in 2009 and more recently in 2020. It’s not a good look. Be focused, be efficient, use technology and upskill your team to boost productivity and loyalty.

But above all, look outside the usual circles for skills. Not having a degree has not held me back. And there will be many talented people in other disciplines that could help boost practices’ fortunes and their abilities to respond to clients.

While there is undoubtedly pain ahead for some, predicting the length or full impact of the anticipated recession is impossible given the myriad variables at play here. One thing is clear, though: Britain’s long-term under-investment in infrastructure (from rail and hospitals to clean energy) is now biting, and while people need to be focused on the now, you ignore the longer term at your peril.

Aside from managing construction cost inflation with the blind hope that this will be absorbed in land values (this rarely happens), the biggest challenge that investors face now is the plummeting value of “brown” assets. This is exacerbated by spiralling energy costs and the dawning realisation that a carbon tax will (or at least should) be introduced soon.

Combined with agents’ falsely inflated narrative on values and no firm data on the true impact of working from home, this uncertainty means those liquidating huge portfolios will face selling at hefty discounts.

As the acceptable face of the property world, architects have a tremendous opportunity to help developers rework portfolios, creating value through ingenuity and intuition. With tenancy voids and debt costs rising, many developers will be open to more creative solutions to repackage buildings and, hopefully, think more carefully about waste-to-landfill and the broader impact on society and biodiversity.

In many areas, such as biodiversity, the bar remains worryingly low. And such opportunities should be seized upon by architects, helping them to establish longer-term client relationships that can see them through troubled times.

While the hunt for intelligent political leadership – like a solution to Britain’s housing crisis – is likely to drag on indefinitely, inflation and economic upheaval will be temporary, and firms should hold firm and keep their chins up.