Architects with Skin in the Game Design Differently

How fee deferrals and equity participation change the way architects make decisions and why it makes buildings better.

By Colin Booth, Principal, Stack Architecture  |  Boston, MA

Stack Architecture is a Boston-based residential and mixed-use architecture firm that takes equity positions and defers fees on a portion of the multifamily projects it designs. This article explains what that practice model does to design quality, cost discipline, and the relationship between architect and developer, and why the effects extend beyond the projects where equity is involved.

What It Means for an Architect to Have Skin in the Game

When an architecture firm has a financial stake in a project's outcome, the architect's relationship to every decision changes. Not because a client demands it. Not because a contract requires it. Because the architect will personally feel the financial consequences of every specification, every detail, and every drawing they produce.

This is what skin in the game means in architecture: the firm takes an equity position, defers a portion of its fee, or both. In exchange, the architect participates in the financial outcome of the building, its construction cost, its lease-up, its return to investors. The incentives that govern every other party in a real estate deal now govern the architect as well.

The moment an architect shares the financial outcome of a project, the way they design that project changes automatically.

At Stack Architecture, this is not a theoretical position. We have structured deals this way on a meaningful portion of our work, always at a developer's request, and what we have observed in our own practice is the subject of this article.

How Shared Financial Risk Changes Design Decisions

Fee-for-service architecture creates a structural disconnect between design decisions and their consequences. When an architect's revenue is determined by hours billed and drawings delivered, there is no direct financial incentive to think carefully about what happens after the documents leave the office. Change orders become the contractor's problem. Cost overruns become the developer's problem. The architect has already been paid.

Shared financial risk closes that gap. Specific behaviors follow:

Material specifications become cost-accountable.

An architect with equity does not specify exterior materials because they look compelling in a rendering. They evaluate materials against what a contractor will actually price them at in a competitive bid, what the long-term maintenance implications are, and whether the aesthetic return justifies the cost. Trendy materials that photograph well but carry installation premiums get scrutinized rather than approved.

Construction documents become contractor-legible.

Ambiguous documentation is a primary driver of change orders and bid overpricing. When a bidder cannot confidently price a detail, they add contingency. When a contractor encounters an unclear condition in the field, they may submit a change order, or increase the bid. An architect who will participate in cost overruns has a direct incentive to produce documents that leave no room for either outcome.

Details that drive value survive value engineering.

When an architect recommends something that costs more, a developer evaluates that recommendation differently when the architect has equity. The conflict of interest is removed. The architect is not advocating for aesthetics at the developer's expense. They are making a thesis about market positioning with their own money behind the argument. Developers accept this. Projects become more considered and more distinctive as a result.

Why Architects with Equity Produce Better Buildings

Residential architecture is a competitive product market. A multifamily building competes for tenants against other buildings in the same neighborhood, at the same price point, offering similar amenities. Design quality is a market differentiator with a direct translation into absorption rate, achievable rents, and long-term asset value.

An architect who participates in those outcomes has an incentive to make design decisions that improve them, not in the abstract sense of making something beautiful, but in the specific sense of making a building that commands a premium above its immediate competition.

When the architect has a financial incentive for the building to be better, the building will be better.

The buildings Stack has worked on under equity arrangements are more carefully resolved at the street level, more disciplined in unit planning, and more legible as market products than the median construction in their neighborhoods. This is not the result of larger budgets. It is the result of an architect making every decision inside the deal rather than outside it.

How Stack Architecture Structures These Arrangements

Stack Architecture offers fee deferrals and equity participation on a portion of the multifamily projects it designs. This is not a standard condition of engagement. It is an option available to developers who want an architect functioning as a development partner rather than a service vendor.

Developers come to Stack for this arrangement for two reasons. First, the financial flexibility: deferring architectural fees reduces soft costs during the development phases when capital is most constrained and every dollar of the debt stack matters. Second, and more importantly, the alignment of incentives: a developer working with an architect who has equity in the project is working with someone whose professional judgment on every design question is backed by personal financial exposure.

The arrangement is always structured at the developer's request. Stack does not impose equity participation as a condition of working together.

How the Learning Transfers to Every Project

The most significant and least anticipated consequence of working this way is what it does to all of Stack's work, including projects with no equity involvement.

Once an architect has designed a project with direct financial exposure, the questions that experience generates do not disappear when the next project has a conventional fee structure. Is this detail buildable without a change order? Is this specification written in a way a contractor can price with confidence? Is this material selection a design decision or a reflex from something seen in a trade publication? The discipline of thinking like a developer, once developed through real exposure, applies automatically.

Once you learn to design with your own money on the table, you cannot unlearn it. The questions stay with you on every project.

This is the broader argument Stack makes about residential architecture practice. Every firm designing multifamily housing in a market-rate or mixed-income context is participating in a financial enterprise. The architect's decisions, unit plans, material specifications, construction details, documentation quality, directly affect whether that enterprise succeeds. Firms that find a way to experience that responsibility directly, through equity participation on even a fraction of their work, become better at all of it.

Why This Applies Specifically to Residential Architecture

The argument for architect equity participation is specific to residential and mixed-use development. It does not translate uniformly across all sectors of architectural practice.

Academic buildings, healthcare facilities, civic infrastructure, and institutional projects are delivered within procurement frameworks, client relationships, and definitions of success that have little in common with the speculative residential market. Institutional architecture responds to program requirements, regulatory frameworks, and long-term facility management objectives. The client is not producing a product for a competitive market. The incentive for an equity-holding architect does not apply in the same way.

Multifamily residential housing is different. It is a product that competes in a market, produced on a timeline that is governed by financing, and evaluated against a financial return. The people who design it should understand that market from inside it. The firms that do will produce work that is measurably better, more buildable, more financially disciplined, and more competitive as a product, than those that remain outside the deal.

About Stack Architecture

Stack Architecture is a Boston-based architecture and development firm specializing in residential multifamily and mixed-use projects. The firm maintains an integrated practice combining architectural design, construction cost estimating, and real estate pro forma modeling from the first day of every project. Stack takes equity positions and defers fees on a portion of its work, functioning as a development partner on projects where developer and architect incentives are fully aligned.