Wednesday, January 23, 2019

AIA: "Architecture billings slow, but close 2018 with growing demand"

by Calculated Risk on 1/23/2019 11:30:00 AM

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

From the AIA: Architecture billings slow, but close 2018 with growing demand

Architecture firm billings growth softened in December but remained positive for the fifteenth consecutive month, according to a new report released today from The American Institute of Architects (AIA). AIA’s Architecture Billings Index (ABI) score for December was 50.4 compared to 54.7 in November. Despite the positive billings, a softening in growth was seen across several regions and sectors, as well as in project inquiries and design contracts.

“Given the concerns over the ongoing tariff situation, it is not surprising to see a bit of a slowdown in progress on current projects,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Growing anxiety over unstable business conditions and the partial shutdown of the government may lead to further softening in the coming months.”
...
• Regional averages: Midwest (56.3), Northeast (51.6), South (49.4), West (49.2)

• Sector index breakdown: institutional (53.1), commercial/industrial (51.2), mixed practice (50.2), multi-family residential (49.8
emphasis added
AIA Architecture Billing Index Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 50.4 in December, down from 54.7 in November. Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction.  This index has been positive for 15 consecutive months, suggesting a further increase in CRE investment in 2019.