by Bill McBride on 5/18/2010 11:59:00 PM
Tuesday, May 18, 2010
Note: This index is a leading indicator for Commercial Real Estate (CRE) investment.
Reuters reports that the American Institute of Architects’ Architecture Billings Index increased to 48.5 in April from 46.1 in March. Any reading below 50 indicates contraction.
This suggests the slump for commercial real estate design might be nearing a bottom. However, according to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So there will probably be further declines in CRE investment through all of 2010, and probably into 2011.
The ABI press release is not online yet.
Click on graph for larger image in new window.
This graph shows the Architecture Billings Index since 1996. The index has remained below 50, indicating falling demand, since January 2008.
Note: Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions.