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Design Demand ‘Modest,’ AIA Says

Thursday, May 19, 2016

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As thousands of architects, designers, business leaders and representatives converge this week in Philadelphia for the annual American Institute of Architects convention, the organization reported “modest growth” in its latest assessment of architecture business activity.

After beginning the year with a decline, the institute says it has seen three consecutive months of increasing demand for design activity at architecture firms.  

project team at work
© iStock.com / shironosov

AIA's billings index reflects an approximate nine- to 12-month lag time between architecture billings and construction spending, and is considered a key indicator of construction-industry trends.

The April Architectural Billings Index retreated 1.3 points from March’s mark of 51.9. Any score above 50 indicates an increase in billings, AIA notes.

The new projects inquiry index in April was 56.9, down from a reading of 58.1 the previous month.

However, a bright spot in this month’s report was that the design contracts index reached 54.3, up from 51.8 in March, the AIA said.

“The strong growth in design contracts—the strongest score for this indicator since last summer—certainly suggests that firms will be reporting growth in billings over the next several months,” said AIA Chief Economist Kermit Baker, Hon. AIA, Ph.D.

The billings index reflects an approximate nine- to 12-month lag time between architecture billings and construction spending, and is considered a key indicator of construction-industry trends.

Conditions Vary

Baker says the scores reflect unusual variation seen across construction sectors.

“Architects continue to report a wide range of business conditions, with unusually high variation in design activity across the major building categories,” he said.

By sector, multi-family residential firms boasted the highest April reading at 53.7, followed by commercial/industrial with 52.0. Mixed practice firms logged 50.0 and institutional was at 49.0.

Convention Center
Photo by JPG Photography; Courtesy Philadelphia Convention & Visitors Bureau

The American Institute of Architects will kick off its 2016 convention Thursday (May 19) in Philadelphia.

Previously, Baker explained that the institutional market has cooled off after a surge of design activity a year ago.

Regional averages for the ABI index were 52.2 for the South, 51.5 for the Northeast, 50.8 for the West and Midwest.

The regional and sector categories are calculated as a three-month moving average, whereas the national index, design contracts and inquiries are monthly numbers, according to the institute.

Economic Analysis

In his in-depth analysis of the ABI, Baker adds that construction is becoming a leading contributor to boosting the economy.

“Spending on nonresidential buildings increased almost 16 percent last year,” he said, adding that spending increased 11 percent during the first quarter of this year when compared to the same period a year ago.

Construction employment is set to add 220,000 jobs nationally through 2016, he noted.

“In spite of healthy construction activity, it is getting more difficult to add workers, since the national unemployment rate in construction was 6.0 percent in April, down from 7.5 percent a year ago, 21.8 percent in April 2010.”

Architects have fared well from the upturn in construction activity, with payroll employees at architecture firms increasing more than 5 percent over the last year, Baker added.

AIA’s 2016 convention begins Thursday (May 19) and runs through Saturday. See “Coatings to Star at AIA Convention” for details about coatings-related educational sessions and exhibits planned.

   

Tagged categories: American Institute of Architects (AIA); Architects; Billings; Color + Design; Construction; Economy; Market trends; Trends

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