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May Architecture Billings Index Bounces Back From April Slump
April showers bring May flowers. The AIA's latest numbers for May's Architecture Billings Index have fortunately showed renewed strength with a score of 52.9, an increase from April's low score of 48.6, which marked a surprising setback into negative territory for the first time in nine months. (Any score above 50 indicates an increase in billings.) “This rebound is a good sign for the design and construction industry and hopefully means that April’s negative dip was a blip rather than a sign of challenging times to come,” said AIA Chief Economist, Kermit Baker, in a statement. “But there is a resounding sense of uncertainty in the marketplace—from clients to investors and an overall lack of confidence in the general economy—that is continuing to act as a governor on the business development engine for architecture firms.” This month all regions remained in positive territory save for the Midwest which dropped to 47.5. The South managed to keep it's head above water with a score of 50.9, the West followed with a 52.1, and the Northeast took the lead with the strongest score of 53.7. Three of the four sectors, Multi-family residential (52.8), Institutional (52.2), and Mixed Practice (51.0), pulled into positive territory while Commercial/Industrial unfortunately tumbled even further with a 47.5. The inquiry index, for possible new projects, has also increased from a 58.5 in the previous month to a 59.1.
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A Tale of Two Hospitals
Ravenswood Hospital.
Scott Baltic

Vacant hospitals have been much in the news in Chicago lately. Plenty of coverage has been given to the battles over saving Northwestern University’s Prentice Women’s Hospital and over what will happen at Children’s Memorial Hospital’s former site in Lincoln Park. Other closed medical centers in Chicago have also been noteworthy, including the old Cook County Hospital building and the architecturally distinctive Michael Reese Hospital campus, which was demolished partly in connection with the city’s abortive bid to host the 2016 Olympics. But the process of reusing these vacant places of healing doesn’t always hit the front pages, and sometimes the reasons why a hospital sits empty for years upon years can be obscure.


Ravenswood Hospital.
Scott Baltic
 
 

Two such hospitals on Chicago’s North Side—Ravenswood Hospital and Edgewater Medical Center—tell very different stories. As one finally nears redevelopment, the other stands as a multi-story eyesore in an otherwise solid residential setting. Their histories highlight some of the redevelopment issues that seem to be characteristic of the phenomenon.

Ravenswood was founded in 1907. By the early 1990s it was sizable, especially for a community hospital—more than 450 beds, a nursing school with a 12-story student residence, a six-story ambulatory-care unit, as well as psychiatric, trauma, rehab, oncology, and coronary-care units, all on a 7.5-acre campus. But around that time Ravenswood started to encounter financial problems, and in 1998 Advocate Health Care bought the business. Despite what reportedly were multiple promises by management to keep Ravenswood open, Advocate began to consolidate the hospital’s services, physicians, and patients at its other facilities. After years of losing money, Ravenswood was closed in early 2002 and soon after was sold to developers.

Over time, various buildings on the campus migrated in new directions. A medical office building at the site’s northwest corner, at Damen and Wilson avenues, became a stand-alone medical professional building, and the former student residence for the nursing school became an apartment building. Both are currently owned by Brijus Properties, Chicago. A hospital tower at the southeast corner of the site reportedly was in use until about a year ago, but is now vacant again. The L-shaped main hospital complex itself—the eight-story Adler Pavilion and an adjoining five-story wing—remained vacant all along.

Enter the Lycée Français de Chicago, a non-profit, bilingual school serving grades K-12. Since its founding in 1995, the Lycée outgrew its campus near Chicago’s lakefront. So the school bought the 3.8 acres occupied by the main Ravenswood buildings and developed a new campus. Chicago-based development consultancy Project Management Advisors (PMA) was brought in around February 2011. The Ravenswood site was not zoned for educational uses, so the Lycée had to re-entitle the property. PMA finished the rezoning, developed concept-level plans and worked up a budget, which is currently about $32 million. Of that, $2.4 million is budgeted for demolition of the two buildings the Lycée bought.

Edgewater Hospital.
Scott Baltic
 

Chad Matesi, senior project manager at PMA, called demolition “one of the challenges of the site” and explains that “the demolition costs are big” in part because of asbestos abatement, which began last August. Another issue, he said, is that because the buildings adjacent to the Lycée’s site were originally developed as part of an overall campus, they share utilities and walls. The building at the site’s southeast corner was added to the five-story wing, so it has no exterior wall on its north side. As the wing is demolished, new exterior cladding will be added to the corner building so its interior is not left open to the weather. Despite those complications, demolition is on track to wrap up this spring.

Construction on the new school, which will total about 85,000 square feet and sit slightly north of the buildings it replaces, will start in January 2014. It is slated to be finished in March 2015, with the school opening that fall.

About a mile and a half north of the Ravenswood campus sits the hulking Edgewater Medical Center. Its story has yet to find a happy ending, and in fact the hospital’s recent history is downright sordid. Local physician Maurice Mazel founded Edgewater in 1929. He, and later his widow, ran the hospital through the 1980s. In 1989, however, a businessman named Peter Rogan bought the nearly bankrupt medical center, reportedly for $1 million in cash and the assumption of $10 million in liabilities.

Rogan’s reign brought a stunning increase in revenues, but through unsavory means. A January 2003 announcement by the U.S. Attorney for the Northern District of Illinois stated that over a six-year period, Edgewater physicians had committed “pervasive fraud,” lying to patients about their need for hospitalization, admitting patients without cause, and performing medically unnecessary procedures, in the process killing two patients.

   
Details of Edgewater Hospital.
Kymberly Janisch; Ken Fager
 

The hospital was closed in December 2001 and many of its physicians and executives faced legal action. Since then the campus has been dormant, with the exception of a former parking lot along Rosehill Drive, just north of the building, which was redeveloped with single-family homes in 2003. The remainder of the property is stuck in a seemingly endless political and financial impasse. Neighborhood residents want a park on all or part of the property, with single-family residential (the site’s original zoning) at most, though senior housing was suggested at one point for the existing buildings. Developer Waveland Partners would like to build a 13-story, 230-unit apartment tower, a 1-acre park and 19 single-family homes. Dexia wants the reported $6-8 million in available TIF funding to demolish the property.

Meanwhile, the hospital’s basement has been flooded for years, its masonry is gradually deteriorating, its windows are broken, and its entrances are unsecured. Fees to the hospital’s bankruptcy attorneys have stacked up into the millions, with no end in sight. A 2010 appraisal estimated Edgewater’s value at only $5.3 million, minus demolition costs.

At the most macro level, said Cornelia Hodgson, principal of C.C. Hodgson Architectural Group, a practice that specializes in healthcare and senior living, independent community hospitals are victims of a movement toward larger healthcare systems. Beyond that, she said, the basic design philosophy of healthcare settings has evolved enormously since many older hospitals were built. Hospitals are now designed to be more patient-centered, not doctor- or nurse-centered. “The entire ambience of the building,” from more-natural lighting to barrier-free access and clear navigation, is more in line with hospitality design.

Older hospitals might not have spaces for current imaging and treatment technologies and might lack the ability to ceiling-mount certain equipment, adequate radiation shielding and sound insulation, and floors with enough weight-bearing capacity. Hodgson adds that standards for HVAC energy efficiency, and especially for air changes and filtration, are tighter now. As for adaptive reuse, Hodgson said there are usually too many plumbing chases for office or even multi-family occupancies. Worse, the typical distance from a major corridor to the parallel exterior wall is often easily 10 feet or more shy of what would be needed for multi-family reuse.

Nonetheless, a few specific adaptive reuse options for older hospitals do exist, Hodgson said. She knows of a hospital in Cleveland that was converted into a nursing home about 10 years ago, and a conversion into assisted living is another possibility. Regardless, the odds against Edgewater being reused loom large as the hospital sits exposed through yet another season.

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AIA Billings Dip Into Negative Territory For First Time in Nine Months
Underscoring the fragility of the economic recovery, the April AIA's Architecture Billings Index dipped into negative territory for the first time in nine months. The slump to 48.6 was significant, down from 51.9 in March (any score above 50 indicates positive growth). “Project approval delays are having an adverse effect on the design and construction industry, but again and again we are hearing that it is extremely difficult to obtain financing to move forward on real estate projects,” said AIA Chief Economist, Kermit Baker, in a statement. “There are other challenges that have prevented a broader recovery that we will examine in the coming months if this negative trajectory continues. However, given that inquiries for new projects continue to be strong, we’re hopeful that this is just a short-term dip.” Regional indexes reversed recent trends with the South leading at 52.6 followed by the West at 50.7. The Midwest slid into negative billings at 49.4, while the East dragged down the overall average with an index of 48.2. By sector, multi-family residential remained strong at 52.0, while institutional work hovered in positive territory at 50.1. Commercial/industrial (49.2) and mixed-practice (48.6) slumped. The inquiry index, for possible new projects, remained robust at 58.5.
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Architecture Billings Index Fluctuates Downward, But Still Positive
The Architecture Billings Index has reported a slight fluctuation in design activity over the past few months, recording a score of 51.9 for March, a 3 point decrease from February’s mark of 54.9. Any score above 50 indicates positive growth. All four regions were in positive territory with the Northeast leading at 54.6, the Midwest at 53.9, the South not far behind at 53.6, and the West finishing with a 51.9. Inquiries for new projects came in at 60.1. “Business conditions in the construction industry have generally been improving over the last several months,” said AIA Chief Economist, Kermit Baker, in a statement. “But as we have continued to report, the recovery has been uneven across the major construction sectors so it’s not a big surprise that there was some easing in the pace of growth in March compared to previous months.” By sector, all areas remained in positive territory: Multi-family residential scored the highest at 56.9, commercial/industrial scored a 53.5, mixed practice followed with a 53.3, and institutional came in last but stayed positive at 50.6.
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That's So 2007: Architecture Billings Index Continues to Show Healthy Increase
Over the past few months the Architecture Billings Index has shown the strongest growth in the demand for design services since 2007 and once again reports an incrementally strengthened score of 54.9 for February, a slight increase from a 54.2 in January (and a 51.2 in December). All four regions scored above 50, an indicator of positive growth. The Northeast performed the best at 56.7, the West and the Midwest tied at 54.7, and the South finished with a 52.7. Inquiries for new projects scored the highest mark since January 2007,  steadily inching to a 64.8 from last month's 63.2. “Conditions have been strengthening in all regions and construction sectors for the last several months,” AIA Chief Economist Kermit Baker said in a statement. “Still, we also continue to hear a mix of business conditions in the marketplace as this hesitant recovery continues to unfold.” By sector, all areas were in positive territory and showed a healthy increase from January: mixed practice (56.9), commercial/industrial (53.3), institutional (50.2), and multi-family residential (60.9), which particularly soared from a 54.9 in January.
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Architecture Billings Index Sees Strongest Gains Since November 2007
The Architecture Billings Index showed renewed strength in January, with a jump to 54.2 from 51.2 in December (any score above 50 indicates positive growth). All four regions were in positive territory with the Midwest leading at 54.4, the long struggling West showing strength at 53.4, the South came in at 51.7, and the Northeast at 50.3. The Index posted the strongest gains since November 2007. Inquiries for new projects also surged, rising to 63.2 from 57.9 in December. “We have been pointing in this direction for the last several months, but this is the strongest indication that there will be an upturn in construction activity in the coming months,” said AIA Chief Economist, Kermit Baker, in a statement.  “But as we continue to hear about overall improving economic conditions and that there are more inquiries for new design projects in the marketplace, a continued reservation by lending institutions to supply financing for construction projects is preventing a more widespread recovery in the industry.” By sector, all areas were in positive territory: mixed practice (54.9), multi-family residential (54.5), commercial/industrial (52.0), and institutional (50.2).
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Five Alive! Billings Index Climbs Again
The AIA's Architectural Billings Index (ABI) stayed in positive territory for the fifth straight month in December with a score of 52.0 (any score above 50 indicates growth). The level of growth edged down slightly from November's mark of 53.2. By region, the Midwest is currently performing the best (55.7), followed by the Northeast (53.1), and the South (51.2). The West remains in negative territory (49.6). “While it’s not an across the board recovery, we are hearing a much more positive outlook in terms of demand for design services,” said AIA Chief Economist, Kermit Baker, in a statement. Federal budget cuts, however, could impact the recovery. “Moving into 2013 we are expecting this trend to continue and conditions improve at a slow and steady rate. That said, we remain concerned that continued uncertainty over the outcomes of budget sequestration and the debt ceiling could impact further economic growth,” Baker said. By sector, commercial/industrial led with 53.4, followed by mixed practice at 53.0, institutional at 50.9, and multi-family residential at 50.5. Project inquiries were also in positive territory at 59.4, down just slightly from November's 59.6. The National Association of Home Builders is also reporting growth and forecasting greater gains:
Multifamily production, which has posted a 273 percent gain from its fourth quarter trough of 82,000 units in 2009 to 306,000 units in the final quarter of 2012, is expected to reach what is considered a normal level of production by 2014. The single-family market, which has the farthest to go, was running at 44 percent of normal production in the fourth quarter of 2012. Single-family starts are expected to steadily rise to 52 percent of what is considered a typical market by the fourth quarter of this year and 70 percent of normal by the fourth quarter of 2014. NAHB is forecasting 949,000 total housing starts in 2013, up 21.5 percent from 781,000 units last year.
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Happier Holidays for Architects as Billings Continue to Climb
Heading into the holidays, the AIA has more good economic news to report: the Architectural Billings Index (ABI) has recorded a third straight month of growth. The October score was 52.8, up from September's 51.6 (any score above 50 indicates a growth in billings). The uptick reflects improving conditions in the housing market and real estate more broadly. All four regions were in positive territory, with  the South leading at 52.8, followed by the Northeast at 52.6, the West at 51.8, and the Midwest at 50.8. By sector, multi-family housing performed the strongest (59.2), followed by mixed practice (52.4), and institutional (51.4). The industrial/commercial sector lagged behind in negative territory (48.0) “With three straight monthly gains – and the past two being quite strong – it’s beginning to look like demand for design services has turned the corner,” said AIA Chief Economist, Kermit Baker, said in a statement. Project inquiries also grew, from 57.3 in September to 59.4 in October.
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Spike in Billings Tied to Demand for More Rental Housing
The AIA has released its Architecture Billings Index (ABI) for September, and the news looks good. According to the organization, the ABI score went to 51.6, up from 50.2 in August (any score above 50 reflects an increase in billings). The spike marks the fastest increase in the demand for design services since 2010. The AIA tied the upswing in billings to an increased demand for rental housing. “Going back to the third quarter of 2011, the multi-family residential sector has been the best performing segment of the construction field,” said AIA Chief Economist Kermit Baker. “With high foreclosure levels in recent years, more stringent mortgage approvals and fewer people in the market to buy homes there has been a surge in demand for rental housing. The upturn in residential activity will hopefully spur more nonresidential construction.” As a leading economic indicator of construction activity, ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. The organization asks participants whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. Any ABI score above 50 indicates an aggregate increase in billings. Scores below 50 indicate a decline. Here’s how the ABI broke down regionally in September: West (53.4), South (51.9), Northeast (49.5), Midwest (47.2). Here’s how the index broke down by sector: multi-family residential (57.3), institutional (51.0), commercial/industrial (48.4), mixed practice (47.8). The new projects inquiry index—an indicator of client interest in design services—also showed some growth. It came in at 57.3, compared to a mark of 57.2 the previous month.
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Architectural Billings Index Continues Slump With Third Month in the Red
The Architectural Billings Index (ABI) for June remained in negative territory for the third month in a row. Last month AIA chief economist Kermit Baker expressed concern that the summertime doldrums might mirror a 2011 trend when the ABI lulled after an initially healthy first quarter. Now it looks as though the index is doing just that. “While not all firms are experiencing negative conditions, a large share is still coping with a sluggish and erratic marketplace,” Baker said in a statement. All of the regions of the country and all industry sectors remained in negative territory with the overall index barely budging from May’s 45.8, with June registering at 45.9 (any score below 50 reflects a decrease). The West continued with its drawn out doldrums, slumping further from 47.6 to 44.3.  The Northeast’s 48.6 slipped to 46.4, while the Midwest moved from 46.8 to 48.0, and the South went from 46.1 to 47.6. The sector breakdown didn’t look much better. The commercial sector fell from 50.7 to 46.9, institutional went from 45.6 to 46.0, mixed practice went from 41.5 to 45.9, and multi-family residential went from 48.9 to 49.0. The constant silver lining remains the project inquiries index, which lifted up a smidge from 54.0 to 54.4.
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Busted Up: Billings Index Plunges Amid Global Economic Uncertainty
“It’s like déjà vu all over again,” AIA chief economist Kermit Baker said of the steep springtime drop reflected in May’s Architectural Billings Index (ABI). Baker was referring to the trend from 2011, when design activity took a substantial hit after an initially healthy first quarter. “But we don’t want to have a repeat of last year,” he added referring to the sluggish numbers that continued to shadow the profession through the fall. The new numbers were the worst since October and, Baker said, reflect trends in the larger economy. All of the regional sectors took on water, as the overall score went from a low of 48.4 in April to an even lower 45.8 in May (any score below 50 reflects a decrease).  The South was hit the hardest with a drop to 46.1 from 49.0.  The Midwest wasn’t far behind with a deeper dip to 46.8 from 50.1. The ever-lagging West went to 47.6 from 46.6. And the Northeast dropped to 48.6 from 51.0. The sector breakdown saw commercial/industrial stay in positive territory at 50.7, but not as strong as last month’s 53.8. Multi-family residential fell to 48.9 from 50.5, institutional went from to 45.6 from 46.6, and mixed practice went to 41.5 from 45.0. If anything, project inquiries remain something of contiguous silver lining, staying in positive territory for months at a time. May’s score was 54.0, a mild shift from April’s 54.4.  But the reality on the ground belies the inquiry trend. “Last month we were willing to believe it was seasonality,” he said. “But there’s something more than weather related activity; it moved beyond that and it’s not incidental that we had a negative jobs report.” In addition to national issues, like jobs, Baker said that certain international trends that spook the larger market find their way into the ABI. He cited uncertainty in Europe and slowdowns in China and India as outside factors. When asked if the ebb and flow just at the fifty mark was the new normal Baker said that the industry, along with the country, is actually in recovery, albeit a very slow one. He noted that he’s hearing fewer negative reports on getting financing. “I don’t think we peaked out, but I think we’ll see longer term growth,” he said.
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Billings Bucks Upward Trend
For the past five months things were looking up for the Architecture Billings Index. Until now. Granted, the index was merely teetering on the positive side of the spectrum at 50.4 for March (any score above 50 reflects an increase), so it didn’t have far to drop into the negative territory of 48.4 for April. Despite the five-month positive stint, throughout the period AIA Chief Economist, Kermit Baker urged cautious optimism in what has clearly been a tepid recovery. In a statement released today, he said that the decline in demand for design services is not surprising considering continued volatility in the overall economy. “Favorable conditions during the winter months may have accelerated design billings, producing a pause in projects that have moved ahead faster than expected,” he said. The regional breakdown took the Northeast to the top of the heap with a score of 51.0, down from last months 53.9. Likewise, the Midwest stayed positive at 50.1, but not quite as strong as the previous month’s 54.1. The South dropped into negative territory at 49.0, down from a positive stance at 50.1. Meanwhile, the ever-sluggish West stayed negative at 48.0, not a much of a shift from last month’s 46.6. In the sector breakdown, the commercial/industrial sector, as usual, took the lead with a positive showing of 53.8, a shift from March’s 56.0. Multi-family residential hovered around the edge at 50.5, not far from last month’s 51.9. Institutional stayed negative at 46.6, a slight change from 47.6. Mixed practice also remained low at 45.0, down from 47.2. The new projects inquiry index checked in at 54.4, down from a mark of 56.6 in March.