It’s been a gloomy few months in Silicon Valley. In the first quarter of the year, nearly every major tech company—Meta, Google, Microsoft, Amazon, Dropbox, Lyft and Zoom—has had mass layoffs. Already in 2023, an estimated 145,000 jobs have been cut in the San Francisco Bay Area, causing stock prices to plummet. Coupled with the recent run on Silicon Valley Bank, the local design community has found itself at the epicenter of economic turmoil.
For some designers in the region, business is trudging along as usual, while others have seen projects stall or clients suddenly asking to see more affordable options. Kendall Wilkinson, a designer in San Francisco, has experienced the latter. “Especially if it’s a guest room or an area of the house that’s not going to be used every day, clients over the past few months [have been] asking about trimming the budget,” she says. Wilkinson attributes the change to an overall air of caution that seems to have taken over the Bay Area.
Mona Ying Reeves, an architect at Remodern, echoed Wilkinson’s observation, adding that, in the Bay Area, projects don’t have to be directly related to the tech industry to be impacted. “Much of how design flourished in recent years was fueled by tech equity and incomes,” says Ying Reeves. “The health of Silicon Valley is integrally connected to real estate prices and affects how much regular people are able to afford. It’s no surprise that when stocks fluctuate and layoffs happen, clients get cautious.” Like Wilkinson, Ying Reeves has noticed clients scaling back and has clocked an uptick in what she calls “bite-size projects,” or people updating one area of their home at a time.
Real estate is typically a harbinger of what’s to come for the interior design industry, and the Bay Area market is showing signs of a slowdown. A report from real estate broker Redfin that was released in March stated that the housing market in tech hubs like San Jose, California, was indeed cooling faster than in other parts of the country, likely due to the uncertainty around the stability of the banking and tech industries. However, because many designers are still working on jobs they began during fatter times, it’s likely the effects—if any—of the tech wobble will take some time to show up. Some firms may be feeling it already. Others may not. Several Bay Area designers who were contacted for this piece said they hadn’t seen any change in their business whatsoever.
Another complicating factor: In the Bay Area more than some other areas of the country, clients’ net worth is often tied up in their equity. If that money is in the stock of a company like Meta, last year was rocky. Local architect Megan Blaine had two projects under construction that were funded by the clients’ Meta stock, which took a nosedive late last year. “Both clients were waiting to cash out, thinking that if they left their money in those stocks, it would keep growing during the yearlong build-out,” says Blaine. Instead, the stocks tanked, forcing her clients to find alternate funding and slash their budgets by roughly 40 percent.
Although Blaine is familiar with U.S. housing slumps, having started her career during the 2008 crisis, she feels that things are different this go-around. “I was an employee at a firm then, not running my own, but there was a moment back then when it felt like the bottom fell out from underneath all of our projects and layoffs began immediately,” she says. “It’s happening more slowly this time—there’s a bank failure here, and tech stocks going down there.” That’s not to say the slowdown isn’t hurting business—Blaine has laid off three employees in the past six months, roughly 24 percent of her staff. “It does feel like business owners in the Bay Area are the canaries in the coal mine right now,” she adds.
But not everyone is feeling the effects of the market shift quite so acutely. Wilkinson, for her part, is actually staffing up. “I’ve been through recessions before, and I feel like I’ve learned where I can cut back in areas that we were flush in previously,” she says, pointing to overhead expenses like storing merchandise or leasing equipment. “There are obvious areas where I’ve been like, ‘OK, we don’t need that, let’s scale back there.’ Maybe I haven’t paid as close attention to some things over the past few years, but now it’s time to prepare for a leaner time, so we pay better attention and do some things differently.”
Homepage photo: ©Larry D Crain/Adobe Stock