2 min read September 2022 — A recession is not going to be all bad for the construction industry. Philip Wilkinson, principal of design and architecture firm AE7, thinks a slowdown in prices and construction costs could be beneficial in some ways. With Invest:, Wilkinson also discusses current market conditions, projects underway and his outlook.
What is the landscape of the market for your business?
What has been interesting is that there has been a real appetite for projects to advance. However, there have been challenges with the supply chain and cost of construction. These variables cause owners to pause and try to figure out what makes the project viable.
Right now, we’re in this kind of gray area with clients wanting to move a project forward but the price uncertainty has caused a lot of concern in the marketplace. The fear and the fluctuations of the economy are challenging because projects need some sort of level of certainty to move forward. As price fluctuation stabilizes, we’re seeing some projects develop and move ahead. So, the challenge will be to know how you get enough certainty to progress in a way that allows a development to take place and be successful.
There are a lot of people trying to figure out what’s right, what’s going to happen for that market sector. As an example, how you convert class-B or C office into something else that will be useful within the city.
What projects have you recently completed and what were the associated challenges?
We’re just finishing Vision on Fifteenth, which provides flex office space in a way that maximizes density. That project was in construction at the very beginning of the pandemic and now it’s coming online. One of the challenges is that it has great office spaces and great views, but the workplace environment is evolving. People are still trying to sort out what it means to work post-pandemic and what they are willing to commit to. I think the building will adapt to the new environment as the client works on bringing tenants on board in that kind of building. The same is likely true throughout the whole office sector. I think that the five-day workweek is a thing of the past for a lot of industries and that represents a change in the office sector as well.
What will be the impact from the current economic environment on construction?
Every recession is different, but some slowdown is good. We’re still looking at the need for people to have affordable housing, for example. With the economy slowing down, hopefully, that will cool overall housing prices and cool construction costs. Those are positives when looking to provide affordable housing.
I don’t think the recession will hit Pittsburgh as hard just because it hasn’t grown as much as many other cities may have.
What challenges exist when pursuing building sustainability?
The big challenge will be with retrofits. We will need to determine best ways to retrofit a lot of the existing building stock in a way that makes them more sustainable. When you look at the built environment, the most sustainable things are already built. The question is, how do we modify this? How do we make it more sustainable in a way that we’re not tearing down, rebuilding and investing in a lot of the existing infrastructure? It’s either through tax credits from the city or through programs that allow registers to take place. For new construction, there’s enough incentive there right now to make the buildings sustainable.
What is the landscape for Pittsburgh in the next four to five years?
If there is a recession, the key is the quality of the building environment, returning to the river and bringing more residents Downtown. I’m focusing on the city, where everything is culturally driven. I think there will be more jobs in tech and healthcare and you will need to reinvent the city in a way that it does not completely rely on office workers Downtown. If you look at the office towers Downtown, half or only one-quarter are full at this point. So where does that go? We will need to reevaluate what the answer is and then how to make the city for residents and not just be corporate-minded. I think if that can be solved, then it will allow Pittsburgh to continue to be a desirable place to live. It will be a place that allows for innovation, and for people to work and live in the same place. I think there’s lots of potential there. It’s just trying to take a long view versus just the short view.
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