Architects and Design and Construction and Real Estate & Retail

Architect finds new path as real estate struggles

April 27, 2010

The 25-year-old Prince/Alexander architecture firm is on the path to being acquired by Dallas-based REES Associates, an employee-owned firm with 120 architects and projects around the world.

Stephen Alexander, founder and sole owner of Prince/Alexander, said his firm’s affiliation with REES in a deal completed April 1 is a transitional agreement that gives REES a stake in the firm and could result in REES taking control in two years.

The former Prince/Alexander, now known as REES Alexander, is down to five architects from its pre-recession peak of 10 three or four years ago, Alexander said. But the local firm wasn’t looking for a lifeline. REES had hired a scout to look for a partner that would give the bigger firm a presence in Indiana, Alexander said.

Frank W. Rees Jr., chairman and CEO of REES Associates, said his firm was looking for a Midwestern presence to replace a Chicago office it closed during a market downturn in the early 1990s.

“A weakness of ours was that our closest offices [to Indianapolis and the Midwest] were in Baltimore and Oklahoma City,” Rees said. “We needed a high-quality Midwestern location to continue our expansion.” If the deal proceeds as planned, Alexander and his Indianapolis team would retain an ownership stake, Rees said.

Among the factors that drew REES to Indianapolis were the aggressive economic development policies put in place by Gov. Mitch Daniels, Rees said. Other REES offices are in Mexico City, Houston, Atlanta and Spokane, Wash. He said across all of his firm’s offices the most active sectors are senior living, health care, education and government.

Alexander, 53, thinks the relationship with REES will put the office here in a better position to compete for projects. “We give them boots on the ground [in the Midwest] and they give us reinforcements in health care and higher education projects.” It’s possible, he said, that the Indianapolis office will contribute expertise to projects REES is working on in India, Africa, Mexico and China.

That would be a big change for a firm that up until now has focused almost exclusively on Indiana projects. He said around 50 percent of the firm’s volume had been designing libraries, fire stations and other government buildings in small and mid-sized Hoosier cities.

Most of that work has dried up because of property tax cap legislation enacted a few years ago that has sapped government coffers, Alexander said.

The firm also has experience with senior housing projects, including the Meadowood Retirement Community in Bloomington, and the Blue Elk project, a seniors community in Nashville that it is designing.

Closer to home, Alexander said his firm has never stopped working on what was to have been a $47 million, 24-story hotel project on West Merrill Street between Eli Lilly and Co.’s Faris Campus, which Lilly has since announced it is vacating, and Lucas Oil Stadium.

The project has downsized considerably since 2008, when it was moving through the city’s approval process. It is now planned as a three-story apartment building, a radical transformation Alexander said was dictated by the economy. He said details of the new project would be released in a few weeks.

Alexander said the affiliation with a larger firm has, so far, been primarily a psychological boost, noting that the firm just won two large contracts, not because of direct involvement from REES but because there is now a greater sense of what’s possible for the firm.

Jason Shelley, executive director of the local chapter of the American Institute of Architects, is in favor of anything that can lift the fortunes of a local firm.
 
The recession has hit the profession harder than most, he said. Because real estate projects have been almost impossible to finance, “everything just came to a halt. Most of our members have had to let people go,” Shelley said.

Alexander thinks his firm’s affiliation with REES will keep his firm from shrinking any more than it has. The only casualty so far has been the firm’s name. The Prince name that had been part of Prince/Alexander since its founding in 1984. The name came from Alexander’s maternal grandfather, who founded the town of Prince’s Lakes, near the Johnson County-Brown County line.    
 

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