High Anxiety: Planning in Uncertain Times

With the recent increase in tariffs, anxiety has shifted away from higher interest rates and declining commercial-property values, says AIA chief economist Kermit Baker. “Now there is more concern over prices and availability of construction materials,” he says. Increasingly, as contractors start searching for new suppliers for many materials, architecture firms will need to provide alternative designs.

Baker’s analysis aligns with comments from Heath May, global-practice director of HKS LINE (Laboratory for INtensive Exploration) and, starting in January 2026, the Dallas-based firm’s CEO. In addition to tariffs, May points to markers such as inflation, shifting monetary policy, and geopolitical instability as factors contributing to uncertainty. Clients are more cautious, sales cycles are a bit longer, and delayed decisions are becoming more common, he adds.

Smaller organizations that specialize in a few core building types may be the most vulnerable. Robin Shambach, a partner at BWS Architects, a 25-person firm with offices in Phoenix and Tucson, Arizona, says she is seeing a slowdown in public-sector work. She is especially concerned about the diminishing project load for federal agencies.

BWS has done a lot of work for the Indian Health Service through an open-end contract, and typically has projects for the federal agency in progress. That’s not the case now. There are no active proposals, and Shambach is uneasy, because much of the agency’s staff, including her main contact, have taken early retirement or been laid off. Similarly, ongoing work for the Smithsonian Astrophysical Observatory, another steady client, is on pause. “Usually, they would be starting on their next round of planned projects, and I’m not seeing that right now,” she says.

In response, BWS has held off on hiring—filling current needs by asking existing staff to cover more assignments. The firm hasn’t had layoffs, instead identifying potential reductions in discretionary spending. “And we are accepting more smaller, ‘messier’ projects,” Shambach says. “We don’t feel that we can pass on those, to make sure we have enough work.”

May says most HKS projects are anticipating cost pressures due to the tariffs, but it’s too early to quantify what the impact will be. They are closely monitoring material pricing at a project level, mindful of the fact that if and when tariffs stabilize, construction costs and timelines will be impacted. In addition, HKS is being proactive by staying in close touch with clients, fabricators, and contractors to anticipate where cost escalation is most likely to occur.

Graham Wyatt, partner at Robert A.M. Stern Architects (RAMSA), of New York, agrees that everybody’s nervous about the tariffs because so many construction materials and products come from abroad. “Prices are higher now than last year, not because the tariffs have been implemented, but because manufacturers and wholesale distributors have to hedge against their risk,” he says.

Wyatt notes that few people seem focused on labor costs. “So much of the labor that goes into building construction in the U.S. is threatened by these immigration pressures,” he says. But when contractors give a price to a potential owner or developer to assess the viability of a project, high labor costs could kill the deal. A shortage of workers could be an even bigger issue, says AIA’s Baker, noting that the typical flow of immigrants, a significant portion of which supports the construction industry, is slowing down.

Looming price escalation has prompted new approaches at Jones Studio, in Tempe, Arizona. The firm is wrapping up design of an education center for the Central Arizona Project (CAP), a network of aqueducts, pumping plants, and pipelines that supplies water to the state’s population. Anticipating rising costs, they worked hurriedly with CAP’s board to get funding approved four months ahead of schedule.

“We did that out of sequence, so the contractor could start buying steel,” says Brian Farling, a principal at the firm. “And we produced some early steel packages to try to head that off.” His advice: work with clients and contractors to get ahead of things before costs skyrocket.

Many firms say they are preparing for uncertain times by relying on operational structures they’ve already put in place, making adjustments as needed. “We’re focusing on agility and consistency,” says May of HKS. “While those may sound slightly oppositional, what I mean is strategic agility to ensure that we can pivot very quickly and decisively when we sense a market condition beginning to shift. And the consistency there is, we want to stay alert to our long-term goals and our long-term values.” That means HKS does a lot of scenario planning, he adds.

Hanbury, a 165-person firm based in Norfolk, Virginia, had an exceptional year in 2024. But CEO David Keith says his leadership team anticipated a sluggish market in 2025, so they held back some profits from last year, to expand markets and make strategic hires to help win work. It was all part of their normal planning process, which resets every two years.

Hanbury is well established in higher education but wanted to boost its presence in the civic and science/technology arenas. The firm, with eight offices, invested some of its windfall in a few experienced people in locations and markets that would expand its presence in all sectors. “Even with the down economy in mixed-use, we brought on a new leader that introduced us to new clients,” says Keith.

A shaky economy has spurred other firms to be more aggressive than usual in their marketing efforts. “We’re normally incredibly selective about what we go after,” says Kevin Sullivan, CEO of Payette in Boston. “We might turn down up to 80 percent of the RFPs we get. We don’t pursue them.”

Now Sullivan’s mindset has changed. Previously, he might have shied away from a project because the budget was low or the client profile was not a good fit. “Where last year we would have said no, this year we’re saying yes,” he adds, echoing the sentiment of Shambach at BWS.

When it comes to hiring, the headlines have Sullivan spooked. In spite of his CFO’s optimistic projections for 2025, he’s skeptical they’ll have a banner year. “So we artificially ratcheted down,” he says. Instead of hiring 10 new employees, they’ve cut it to five. “I have to maintain some optimism by hiring people just because we have work on the books, but I just don’t believe all those projects are really going to happen,” Sullivan adds.

Uncertainty in the realm of immigration enforcement has cast a cloud over many foreign-born employees. Just obtaining an H-1B visa, an employer-sponsored visa for workers with specialized expertise, is already an unpredictable process, determined by a lottery. “But those individuals are terrified,” says Sullivan, noting that foreign nationals comprise nearly one-third of Payette’s staff.

When firm leaders became aware that the Department of Homeland Security was telling visa holders to keep their documents always on hand, they sent a targeted email to everyone who was affected to let them know what was happening. “We’re being ultra-communicative as a way to calm things down a little by keeping people informed, believing that more knowledge is better than not knowing and wondering,” Sullivan says.

The current turmoil reminds seasoned leaders of earlier economic challenges such as 9/11, the 2008 mortgage crisis, and Covid. “The pandemic was the closest thing to this because it was such a sudden and dramatic change to everything we knew of as normal,” says Perkins&Will’s Harrison. “But we were dealing with a single-dimensional problem.” In this case, because there are so many different sources of uncertainty, it’s harder to know how to respond, he says.

Granted, there is a nagging sense among some that damage is being done to American cultural and civic institutions—damage that could be irreversible. That’s the most disconcerting part, says Shambach. “We don’t know the impacts of, not just the tariffs, but the structural changes at the federal level.”

For now, Shambach is turning that anxiety into a source of inspiration. “I’m going to focus my energy on serving our projects, our clients, and the work we’re doing with the staff we have,” she adds. “I’ve re-geared to have that perspective. That’s where I can have the biggest impact right now.”