Building's booming | August 2, 2013 | Palo Alto Weekly | Palo Alto Online |

Palo Alto Weekly

Real Estate - August 2, 2013

Building's booming

Years after the Great Recession, local architects, contractors rebounding

by John Brunett

With the sounds of hammers ringing all over town, it's clear that home remodeling is on the upsurge in Palo Alto.

Contractors and architects are busy churning out projects as small as kitchen remodels and as big as Larry Page's new house on Bryant Street. Bud Starmer, the City of Palo Alto's supervisor of inspections, said the city handed out almost triple the amount of building permits this fiscal year than they did the previous year.

"It's interesting because the city of Palo Alto never really slows down, and now we're even busier," Starmer said.

Contractors and architects around the area found that the recent recession did not necessarily bring the construction market to a halt like it did elsewhere in the United States, but it did cause many of the bigger, new projects to be downsized into smaller remodels.

But Palo Alto's construction market did not necessarily reflect the national economic distress, according to Carl Hesse of Palo Alto architectural firm Square Three Design Studios.

"In many ways we found no impact, especially in this area," he said. "When it hit (in 2008), we had a decent backlog to fall back on, so it didn't really hit us until 2010."

And even then, Hesse said projects did not disappear, but merely became smaller in size.

Gary Ahern, who owns a small architectural firm Focal Point Design in Menlo Park, experienced some clients who pressed pause on their projects until after the market recovered.

"I had some clients who slowed things down (when the recession hit)," Ahern said. "We put it on the back burner for a while. They called back after they were able to liquidate some stocks, and we were able to move forward."

Certainly, the crash affected different firms in varying degrees. Karl Sherwood-Coombs, an architect with Palo Alto-based ACS Architects, did not have nearly the good fortune as the other local firms.

"There's no question that when the recession hit, my desk cleared up," Sherwood-Coombs said.

Those projects did not stall, he said, but rather left completely. Even now, with the market hitting 11 straight months of growth according to the American Institute of Architects (AIA), Sherwood-Coombs said he could be doing more.

"Some offices in Palo Alto are swamped, and I'm not," he said. "I'm still looking for more projects."

Devon Carlock, an office assistant at Chris Donatelli Builders in San Jose, said his firm experienced some clients who ditched, downsized or stalled their projects. To him, the biggest impact of the recession is in how people manage their money through the process.

"People are more focused on controlling their budgets," Carlock said. "They're focused on dollar amounts, trying to break down each part of the project. They want to delineate the cost of each piece compared to another."

Yet his firm is seeing the larger jobs come back. "People are more ready to take it on with the market stabilizing," he said.

Now, as the market inches past where it was in 2008, the question becomes whether or not there will be another crash looming ahead. Sherwood-Coombs said he thinks people probably have learned from the mistakes of the past.

"I think there might be some temporary problems, but nothing like what we experienced four or five years ago," he said.

Starmer said the building department issued roughly 4,000 building permits and 24,000 inspections in the last fiscal year, more than any year since 2007. Along with those numbers, Starmer said the fact that most of the concrete in the area is bought out is a good indication that the housing market is "back to normal."

Daniel Garber of Fergus Garber Young Architects said his Palo Alto firm also has seen the market rebound in the last few years, but cautions against the nature of the business.

"(I'm) wearily optimistic," Garber said. "Architecture tends to be a cyclical business, so you can't peer too far into the future."

Kermit Baker, AIA's chief economist, said that Palo Alto is one of a select few areas in the nation that have returned to their pre-recession high.

"I can't think of anywhere else where that would be the case," Baker said. "Nationally (housing markets) are still down 20-25 percent of what they were before the recession."

As for right now, contractors and architects alike are happy to hear their phones consistently ringing again. Perhaps Ahern said it best: "I have more work being offered to me than I can accept."


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