Wednesday, July 21, 2010

AIA: Architecture Billings Index shows contraction in June

by Bill McBride on 7/21/2010 03:59:00 PM

Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.

Birmingham Business Journal reports that the American Institute of Architects’ Architecture Billings Index increased to 46 in June from 45.8 in May. Any reading below 50 indicates contraction.

The ABI press release is not online yet.

AIA Architecture Billing Index 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.

This suggests the slump for commercial real estate design is ongoing. 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 into 2011.