Financing, Design and What's Next.....

by: Peter Stuhlreyer, AIA


These past few months have been very exciting.  We are seeing a dramatic increase in "client confidence", especially in the Restaurant and Bar sector.  There has been a change in the business atmosphere such that my clients are now coming out of their defensive postures and moving cautiously towards expansion and improvement. 

The reality check, unfortunately, is that traditional banks are not lending in a reasonable fashion.  Fortunately, small businesses, medical practices, landlords and even home improvement clientele refuse to put their lives on hold while banking institutions decide how to conduct themselves.  All of our active clients have found creative financing through private loans, SBA backed borrowing, contractor financing or simply paid cash.  Several developers with whom we work are even entering the business of construction and real estate lending.

The "dirty secret" is that there is business demand in many sectors, and, on a case by case basis, many businesses are experiencing healthy growth.  These businesses have no problem making mortgage or rent payments and are forecasting good things for future returns.  Unfortunately,  big banks are unwilling to distinguish individual businesses and owners from regional and sector statistics.  I would argue, also, that since "bankers" never assessed the design aspects of my projects from the perspective of added value (defaulting to stiff and irrelevant metrics that used to be too easy to meet and now are too hard too meet regardless of the individual project), they likely have never had a process to truly understand the totality of the project and team.  Had this appreciation for qualitative issues been in place, it is likely that many bad loans would not have  been made and far less denigration been done to suburbia, including the reduction in expectations of the public concerning the built environment.  Ironically, I have never been asked to present a design to a banker to quantify why the IDEAS in the design would be one of, if not the only project aspect that would elevate the real estate and give it a competitive edge.

If traditional bank lending does not begin to learn how to assess good design as a major value asset, it may never understand where it went wrong, how to do better or even who to lend money to.  Private financing naturally tends to focus on design details.  Closer relationships create a spirit of collaboration and lead to better design, successful projects and then more private financing.

In the vacuum left behind by the disappearance of commercial bank lending, I am quite certain that we will keep finding new and better ways to finance the construction necessary for business to flourish and our collective quality of life to improve.  I hope, as well, the new methods will foster better architects and more evidence that Good Design is Good Business.

"Two roads diverged in a wood, and I... I took the one less traveled by, and that has made all the difference."