Manchester practices are bearing the brunt of the rising tide of insolvencies that could spell “catastrophe” for the wider profession, new research reveals.

Against the backdrop of the credit crunch and a massive oversupply of inner city apartments, accountancy firm PricewaterhouseCoopers said that three architecture firms in Manchester became insolvent in the second quarter of this year alone.

A further five design and architecture firms have gone bust in the wider north-west region this year, and the picture for England and Wales as a whole is bleak, with more than 30 such firms going under so far in 2008 and predictions that this could rise to 80 by the end of the year.

 

There’s a perception that the market will not return to normality until at least 2010.

Barry Gilbertson

Manchester practices Arca, Leach Rhodes Walker and AGP Architects all went insolvent in the last quarter, according to PricewaterhouseCoopers.

Manchester Society of Architects vice president Justin O’Brien said he was “shocked” at the speed of events. “People had assumed that cash flows were relatively OK, and that perhaps in the longer term there might be some reducing of staff, but not that they would be going bust this quickly,” he said.

“The practices that have got into trouble tend to be heavily reliant on a single developer. When [a developer] goes, it takes them with it.”

Leading Manchester architect Ian Simpson, who has seen a string of his own projects put on hold in recent months, claimed many smaller practices were doomed.

“There is still much greater value in the south of England than the north. In northern cities, work will come to a standstill in many places. If you are solely reliant on commercial residential business, there is a risk of going out of business.”

Arca, which specialised in residential work, was forced to declare insolvency in June and then restructure with the loss of six staff after developer BS Construction, a major client, went into administration. The loss scuppered its £180 million Greengate towers scheme in Salford and forced the directors to relaunch the business using their own finances.

Leach Rhodes Walker, which is still trading after a management buyout, insisted it was never insolvent but that it had been affected by parent company Erinaceous going into administration in April.

Barry Gilbertson, a PricewaterhouseCoopers partner and construction industry expert who revealed the latest figures, said: “The general perception is that the market will not return to something that resembles normality until at least 2010. Another 30 months without a flow of new instructions would be catastrophic.”