SBJ/Aug. 25-31, 2014/Facilities

360 principals see growth by joining with HOK

HOK’s purchase of 360 Architecture is another example of the thinning ranks of stand-alone companies in sports facility development, as smaller firms sell to larger entities to expand business and form an exit strategy for senior leadership.

The design for the new Falcons stadium came from 360.
Rendering by: 360 ARCHITECTURE
The two architects last week jointly announced the acquisition, which folds 360 Architecture’s 180-person staff and its three offices into HOK, a much larger, global firm employing 1,600 people in 23 cities worldwide. Last year, HOK reported $400 million in gross fees, according to its website.

The agreement follows last month’s announced merger between AECOM, the world’s largest architectural services firm, and Hunt Construction Group, North America’s top sports builder. In both cases, the sellers looked to help expand business internationally, lay a foundation for the future and — industry observers said — ultimately give ownership of the smaller firms a clear path to retirement without the burden of finding a successor.

Brad Schrock, one of 360’s six senior principals, would not say how the HOK deal affects his long-term future other than that he’s excited about the increased opportunities his staff has now that it’s part of a larger firm that works outside of sports.

But his peers such as Ron Turner, Gensler’s director of sports and entertainment, say the deal gives 360 principals the buyout opportunities they’re looking for down the line in addition to creating greater resources within a larger company. The deal answers the big question many industry observers had regarding HOK’s strategy to return to sports design after an absence of more than five years. In 2009, a group of six principals and other architects at HOK Sport split from their corporate parent and formed Populous, a separation that included a five-year noncompete clause.

“Everybody in the sports architecture world knew when [the noncompete clauses expired] that HOK was going to get back in sports,” said Tom Tingle, Skanska’s senior vice president and national director of sports and entertainment. “If they did it without an acquisition, they would be behind everybody else and trying to catch up. This is a smart move. It gives them a new level of credibility and they are now an immediate player in the market.”

About two months ago, HOK contacted 360 about the potential merger, and 360 officials quickly agreed on signing a deal with the larger firm, considering their strategy for expanding their business.

“We’ve been thinking about doing something like this,” Schrock said. “Along came a phone call from these guys at HOK that we know and respect. From the moment we met, we really hit it off.”

The purchase price was not disclosed. The deal is expected to close in late October, Schrock said. The 360 Architecture name goes away after a brief transition, and the sports practice will carry the HOK brand.

The acquisition marks a return to HOK for Schrock and fellow 360 co-founder and senior principal George Heinlein. Both architects essentially started their careers at HOK in the 1980s designing arenas and stadiums before leaving in 1995 to form Heinlein Schrock Stearns.

In 2004, Heinlein Schrock Stearns merged with CDFM2 to form 360 Architecture.
Considering their history at HOK, both architects said they felt comfortable selling their business to a larger firm they say has similar values and philosophies. What remains to be seen is how things shake out on the personnel front after the merger is completed, industry sources said.

“What stays and what leaves is important,” Turner said. “Somewhere along the line, Populous and HOK didn’t get along. Maybe HOK has changed. What’s key is how cultures merge and create something bigger and better but also harmonious.”

Bill Hellmuth, HOK’s president and senior design principal, said he expects his company to be in a hiring mode for sports projects. On its own, 360 has been looking to hire about a dozen designers during one of the busiest periods in its 10-year history, senior principal Tom Waggoner said.

Over the past 15 months, 360 Architecture has won jobs to design new facilities for the Atlanta Falcons and Detroit Red Wings, in addition to renovating arenas for the San Antonio Spurs and Carolina Hurricanes. Over that same period, 360 won the contract to help design a $400 million renovation of Notre Dame Stadium.

HOK’s global practice provides 360 with a greater number of opportunities to design sports venues overseas.

“We’ve dabbled in that a little bit, but it’s been a case of [potential clients] coming to us,” Heinlein said. “Now, we can be more proactive marketing projects on the global front.”

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