We all know what value engineering is when it comes to buildings. Generally speaking, it is the process of trying to identify high-cost items with relatively low perceived value. Once you identify these items, you then remove them (if you can), replace them with alternatives, or find other creative solutions. All projects have to do this at one point or another because, well, money doesn't grow on trees.
One way to think about this is in terms of the following four-quadrant chart:
Low-value and low-cost items aren't expensive, so you will probably just leave them alone. But if you can move them up to the next quadrant, that's even better.
High-value and low-cost items are the ideal place to be. One example might be a low-cost material that gets applied in a creative way so as to create high perceived value. This is where design really becomes alpha.
Low-value and high-cost items are the fertile ground for value engineering exercises. If the perceived value is low, why spend the money on it? Surely there must be other options.
High-value and high-cost items, on the other hand, require the most thought and debate. How high value is it? Do we really need or want to spend the money on it? One example of this would be the architectural facade lighting at One Delisle. Sadly, it was not free.
Years ago, the team presented it as a possible value-engineering option. But ultimately, we viewed it as being fundamental to the overall design. Its perceived value was off the charts. I mean, why invest so much in the architecture only to cut the very thing that helps prominently display it? So a decision was made to keep it and, boy, am I glad we did.
There's nothing else going up in Toronto like it.
CoStar recently published an article titled “Architectural stars appear on the skyline of Canada's largest city — Toronto reaches a new level of global reach and ambition.”
What the article is talking about is a slew of iconic, under-construction projects designed by some of the world's most celebrated living architects. Namely, Forma by Frank Gehry (Los Angeles), One Delisle by Jeanne Gang (Chicago), KING Toronto by Bjarke Ingels (Copenhagen), as well as a handful of other noteworthy projects by some of the best local firms in Toronto.
It is no doubt an exciting moment. These are projects that, I think, the world will come to associate with our great city. They will strengthen the global brand of Toronto.
But let me also state the obvious: These projects are the result of a particular moment in time and a particular point in the last real estate cycle. They wouldn't exist today, irrespective of our level of ambition.
This is not to say that this calibre of project won't exist again in the future — it will. But for right now, these are special and differentiated architectural treasures that truly stand alone, showing us what is possible when we bet on the unknowable future.
Architecture billings are typically viewed as a leading indicator for the development industry. That's because, in order to build things, you need permits. And in order to get permits, you need architects to draw things.
So every month, the American Institute of Architects surveys design firms as a way to determine how the industry is doing. The primary question it asks is: Have your billings increased, decreased, or stayed the same in the month that just ended? Based on the proportion of respondents choosing each option, an Architecture Billings Index (ABI) score is created.
A score of 50 means there has been no change in billings from the previous month. A score above 50 indicates an increase. And a score below 50 indicates a decrease. Here's this score for August 2024 to August 2025:
Billings are down across the US. In fact, the survey notes that the value of design contracts has declined for an 18th consecutive month, marking the longest period of decline since the survey started 15 years ago. This is true across all regions, though the South has the best relative performance and the West has the worst. The commercial/industrial sector also appears to have the best relative performance, which, I'm only guessing, could be a result of things like data centers.
I don't have perfectly comparable data for Canada, but I know that architecture billings are way down in markets like Toronto and Vancouver. Architecture and development firms continue to lay off people, which is the strongest kind of indicator.
One of the things I always find interesting is how globally connected we all are. Real estate may be a local business, but it does depend on global capital flows and overall sentiment. The US market is soft. The Canadian market is soft — with some markets being largely shut off, to be more precise. And when I was in Paris last month, I heard a lot of the same from architects and developers (except from those able to subsist on government work).
Images: AIA / Detek ABI (August 2025)