🔒Architectural firm SLAM grows national presence through acquisition

When architectural design firm SLAM announced in March 2020 its acquisition of five CBRE | Heery Architectural Design practices across the country, the Glastonbury-based company achieved two strategic objectives: expand its national footprint and expertise to compete in new markets, according to President Bob Pulito.

Within a week, COVID-19’s onset in the U.S. put several of the firm’s — and design industry’s — projects on hold.

But Pulito says the acquisition — one of several in the company’s history — turned out to be a strength, enabling SLAM to weather the depths of the pandemic and position itself for growth this year and beyond.

The purchase of the Heery design practices — which included offices in Atlanta, Denver, Iowa City, Orlando and Philadelphia — was part of SLAM’s long-term growth strategy, Pulito says, to meet the increasing demand among top-tier clients for a national presence and expertise.

“We’re an expertise driven firm and [large institutional] clients want to know what’s going on [in the industry] nationally and they want a competitive edge and a broader perspective,” Pulito said.

Firm reach and diverse expertise are important revenue drivers. According to the Architectural Institute of America (AIA), larger firms continue to have an outsized impact on the market. While 60% of firms have fewer than five employees, those with 50 or more employees drive nearly half of all revenue.

And firms with more than 100 employees, like SLAM, which now has a workforce of 270 nationally, account for more than one-third of all sector revenue.

That size and scope was particularly important for SLAM during the pandemic because COVID hot spots did not impact all parts of the country evenly, or at the same time, which gave SLAM’s team additional flexibility.

Despite having nearly 30 projects put on hold initially, Pulito says, his firm was able to shift employees to different office locations less impacted by COVID and pivot to new opportunities that emerged from the pandemic, such as additions to healthcare facilities.

In Connecticut, for instance, Pfizer hired SLAM to create a research-and-testing facility for the COVID vaccine.

That’s consistent with data from the AIA, which found that as business ticked up in the first quarter of 2021, healthcare facilities were among the strongest performers for architectural firms with spending up 1.4%, compared to modest declines in client spending in other sectors like retail, religious and education properties.

Jennifer Riskus, director of market and economic research for AIA, says the pandemic’s onset caused the steepest one-month drop in the monthly architectural billings index — a leading economic indicator of non-residential construction spending — since 1995, when the organization started tracking the numbers.

The design industry — particularly firms with expertise in diverse markets — has been slowly recovering through growth sectors like warehouse and distribution and multifamily residential projects, which saw growth in 2020.

“We’re also seeing a lot of opportunities for remodels and retrofits to existing buildings,” Riskus said. “Clients are looking to update buildings with [better] filtration systems, for instance, in a post-pandemic world.”

In fact, AIA survey results show that more than one-third of U.S.-based architectural firms’ billings through July 2021 was for work on, or additions to, existing facilities.

Collaborative approach

Pulito said one of SLAM’s strengths is the scope of sectors it supports, including higher education, K-12 public and private education, health care, corporate, justice and sports/recreation. The firm currently has more than 500 active projects, which can range from $1 million to $300 million in scope.

Increasingly, Pulito says, architectural teams must work more collaboratively across sectors as large-scale, public-private partnerships in health care, life sciences and education are more frequently intersecting.

“What we’ve seen in the [architectural] industry and the world in general is a cross-disciplinary approach,” Pulito said.

He points, as an example, to a private industry lab space that may be connected to a public university’s research. That, he says, requires an architect who has expertise in higher-ed design to understand and collaborate with expertise in healthcare design.

“Different industries are starting to collaborate so [we] need to know the latest trends in other [connected] industries, too,” Pulito said.

That’s been a big advantage of SLAM’s Heery acquisition, which enhanced talent in certain sectors and expanded — particularly with justice and sports-related design — the firm’s reach into new industries.

That diversity — along with a federal Paycheck Protection Program loan — helped SLAM end 2020 roughly flat year-over-year and well-positioned to compete more nationally.

It reflects Pulito’s bullish outlook for both his firm and the architectural industry.

He says SLAM’s growth strategy — with a targeted goal of doubling its clients in the next five years — includes exploring additional acquisitions with a focus on building its West Coast and southwest presence, particularly around higher education, and creating a greater focus on life sciences, a key growth sector in Connecticut, Boston and California.

It’s a lesson, Riskus says, that the last year-and-a-half has reinforced for architectural firms.

“The pandemic underscored the value of having a diverse portfolio,” she said.