Stakeholder Perspectives

Events for Structural Engineers

ACEC Fall Conference

October 16-19, 2022, Colorado Springs, Colorado

ACEC sponsors two major national meetings each year: the Annual Convention and the Fall Conference. National meetings provide attendees an opportunity to obtain information about issues that affect the industry through informative education, networking, and exhibits. The Coalition of Structural Engineers (CASE) hosts a roundtable at each meeting to discuss issues specific to the field of structural engineering. Hope to see you there! www.acec.org/conferences/2022-fall-conference

Business of Structural Engineering Bootcamp: Claims and Contracts

November 1, 2022, Chicago, IL

Are you positioned to succeed in a highly competitive profession? You know how to design and understand the code, but do you understand the business implications of your daily activities? NCSEA and CASE have teamed up to better equip the structural engineering leaders of today and tomorrow with tools they can use to excel at the business side of structural engineering. Join us Tuesday, November 1, 2022, from 8:30 am to 4:30 pm. www.ncseasummit.com

Invest in the future of our workforce. Donate to the CASE scholarship fund! Student News

Your monetary support is vital in helping CASE and ACEC increase scholarships to those students who are the future of our industry. All donations toward the program may be eligible for tax deduction and you don't have to be an ACEC member to donate!

Donate today: www.acecresearchinstitute.org/scholarships Congratulations to the 2022 CASE Scholarship winner, Taylor Drahota, from the University of Nebraska-Lincoln! View information about the scholarship and winners at acec.org under “Awards.”

CASE Tools and Resources Get to Know the CASE Committees

The CASE Coalition has several committees that meet regularly to develop documents that help guide engineers in their business practice. The work of these committees is an important part of what coalitions do and is one of the most significant values of CASE membership. The Toolkit Committee develops and distributes tools built around the 10 Foundations of Risk Management to reduce risk in member firms. Structural engineers have the highest claims-to-revenue ratio among practitioners in the Architectural-Engineering (A/E) field. However, structural engineers do not necessarily have more claims made against them. Instead, these claims tend to be higher per claim than claims for other types of engineers or architects. These Foundations were developed by engineers in private practice to help engineering firms focus their practice on avoiding and minimizing risk. The first five Foundations deal with the process of the engineering business, and the last five deal with project management. This month, the Toolkit Committee met in person at the Coalitions Summer Meeting in Salt Lake City, UT. We are currently seeking new members to join the Toolkit Committee. Do you know someone in your firm looking for ways to expand and strengthen their business skillset, gain experience serving on a committee, sharpen their leadership skills, and travel to interesting places? Please consider applying for a position on the committee. Committee member commitments include a monthly virtual meeting, working on relevant documents a few hours a month, and travel to the winter and summer coalitions meetings! To apply, your firm should: • Be a current member of ACEC • Be a member of the Coalition of American Structural Engineers (CASE); or be willing to join the Coalition • Be able to attend the groups’ regular face-to-face meetings each year: August, February (hotel, travel partially reimbursable) • Be available to engage with the committees via email and video/conference call • Have some specific experience and/or expertise to contribute to the group

Did You Know?

CASE has tools and practice guidelines to help firms deal with a wide variety of business scenarios that structural engineering firms face daily. So whether your firm needs to establish a new Quality Assurance Program, update its risk management program, keep track of the skills their young engineers are learning at each level of experience, or need a sample contract document – CASE has the tools you need!

Check out some of the CASE Toolkit Documents: CASE Tool 1-1 – Create a Culture for Managing Risks and Preventing Claims.

Initially designed for structural engineers with high claims-to-revenue ratios, this download is intended to inject a risk management culture into your firm. This is the first and most comprehensive tool offered on risk management in the engineering industry. It includes a video, a storyboard, and a role-playing guide to involve your staff in the risk management discussion. In addition, this Tool includes sample commitment statements for your firm to buy into the process. If you want to start your firm personnel on the path to sound risk management habits, this is where you start.

CASE Tool 2-1 – A Risk Evaluation Checklist.

This tool provides one way for you to act in both a preventative and proactive way before starting a project in your office. The purpose is to evaluate risk by considering a variety of factors and perspectives and determining whether the risk(s) of the pursuit is a worthwhile investment of firm resources. CASE Tool 3-2 – Staffing and Revenue Projection Tool. The Staffing and Revenue Projection Tool Firm and project planning are crucial to reducing your firm’s risk and avoiding claims. One major facet of firm planning is predicting upcoming revenue and staffing demand to ensure that your firm has the resources to service upcoming booked and potential projects adequately.

You can purchase these and other Risk Management Tools at www.acec.org/bookstore. If you are a member of CASE, this tool and all publications are free to you. NCSEA and SEI members receive a discount on publications. Use discount code – NCSEASEI2022 when you check out.

The “Under-Demanded” Office Market

By John McNellis

The following is a developer’s view of today’s built environment as a result of COVID and work-from-home restrictions. STRUCTURE believes it is important to visualize how these factors can influence the field we work in. This regional example is reflective of many areas around the U.S.

The swallows abandoned San Juan Capistrano in the 1990s. Their home – the historic mission – underwent a renovation; the birds lost their ancestral nests and, despite every effort to lure them back, they have yet to return in meaningful numbers. No less flighty, workers abandoned their office buildings in 2020. They, too, have migrated elsewhere. Those in real estate ask themselves when office employees will return. Others wonder if they will return. Back to that existential question in a moment.

Global Commercial Real Estate Services (CBRE) has just published the 2nd quarter results for San Francisco’s office market. Almost 29 percent of the city’s office space – about 25 million square feet – is now available. Vacancies increased by 362,000 feet in the 2nd quarter, and about 550,000 feet of brand-new office space is coming on line soon. In short, the vacancy rate is climbing toward a cloud-obscured peak. One industry executive wryly observed, “We’re not overbuilt, we’re under-demanded.”

Turning this data around, 71 percent of the city’s buildings are leased. Sadly, that figure is somewhat misleading. In these “covidy” times, a building’s occupancy rate is a far more critical metric than its leased rate. Kastle Systems, a workplace security company that requires office employees to swipe entry cards, provides precise occupancy data. As of this writing, San Francisco’s overall occupancy rate – the workers who actually show up – is 39 percent.

A 39 percent occupied building may have a happy ending, but like falling in love with someone with a bad heart, you could find yourself praying in the emergency room before it is all over. Meanwhile, with the exception of the swankiest buildings – say, Sales Force Tower – rents are plummeting; tech is down 24 percent on the NASDAQ and shedding workers like winter coats in Miami.

None of this is news to the office world’s big hitters, major league owners, lenders, and brokers. In fact, the country’s biggest banks have all but ceased lending on high-rises, and big equity, the kind you need to buy a $500 million building, has run for the exits. “There is almost no liquidity in the office market today,” a seasoned mortgage broker proclaimed. “No one knows where pricing will be when one of these towers finally does sell.” I asked a handful of industry leaders how much high-rises had dropped in value over the last two years. Their guesses (yes, guesses) ran anywhere from a decline of 25 to 60 percent. This broad lack of consensus is part of the problem; without consensus on value, there is no marketplace, leaving office buildings buried under ten feet of permafrost.

Why? Back to those missing workers. No one (including this writer) knows how many employees will eventually return. Assuming you are OK with deep recessions, the rosy scenario for a prodigal worker homecoming goes like this: tech’s massive lay-offs will continue, employers will regain the whip hand, and they will force their employees’ return. One pundit believes that clever workers will come back on their own once they realize that remote working sets them squarely at the lip of Mount Doom. How? If work remains remote, if employers capitulate to it, companies will stop paying $220,000 a year to some guy coding from his Snake River shack when they can get the same quality from Mumbai for $90,000. The problem with this homecoming prediction is its underlying assumption that tech actually wants its employees back. I asked a half-dozen CEOs of small to mid-sized tech companies how efficient they were running remotely. This one had total consensus: they are all humming along, 90-100 percent as effective as they were pre-Covid. That may not be true for the FAANGs of the world (an acronym for the five most popular and best performing tech stocks in the market), and it certainly is not true for start-ups; everyone agrees that nascent companies require all hands to huddle endlessly. But between Google and a garage venture, there must be hundreds, if not thousands, of companies with no need to revisit downtown anytime soon. The author’s essays recently insisted that, despite all the troubling economic news, real estate would cough up few good deals because of the trillions in opportunity funds desperately seeking yield. Office buildings could prove an exception. In five or six years, we may well look back at 2023-24, whack ourselves on the forehead, and swear, “How the hell did I miss that? I could have bought a Class A office for fifty cents on the dollar.” If you are willing to place a career bet on the return of the swallows, you could possibly reap the biggest reward real estate has offered since 1992. For what it’s worth, I do think the city will right itself, the employees will return, and landlords will once again toast each other’s brilliance. I’m just glad I don’t have to bet on it.■

This essay originally appeared in The San Francisco Business Times and is reprinted with permission. A graduate of the University of California at Berkeley and Hastings College of The Law, John co-founded McNellis Partners, a Northern California shopping center development firm, in 1982. John is a decades-long member of the Urban Land Institute and the International Council of Shopping Centers (ICSC), among others. Mr. McNellis writes a monthly essay for the San Francisco Business Times and is the author of Making it in Real Estate: Starting out as a Developer. All of John's essays may be viewed at McNellis.com.