by Calculated Risk on 3/25/2021 10:50:00 AM

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

From the AIA: Architecture billings climb into positive territory after a year of monthly declines

Continuing the positive momentum of a nearly three-point bump in January, the Architecture Billings Index (ABI) reached its first positive mark since February 2020, according to a new report today from The American Institute of Architects (AIA).

AIA’s ABI score for February was 53.3 compared to 44.9 in January (any score above 50 indicates an increase in billings). February also marked the first time the design contract score rose back into positive territory since the pandemic began with a score of 51.6 compared to 48.8 in January. The new project inquiries score for February reached a 22-month high water mark with a score of 61.2 compared to 56.8 in January.

“Hopefully, this is the start of a more sustained recovery. It is possible that scores will continue to bounce above and below 50 for the next few months, as recoveries often move in fits and starts,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Beyond the encouraging billing data, architecture employment added 700 new positions in January and has now regained 45 percent of the jobs that were lost since the beginning of the pandemic.”
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• Regional averages: South (52.4); West (49.5); Midwest (49.3); Northeast (46.9)

• Sector index breakdown: mixed practice (52.5); commercial/industrial (50.5); multi-family residential (48.3); institutional (47.8)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 55.3 in February, up from 44.9 in January. 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.

This index was been below 50 for eleven consecutive months.  This represents a significant decrease in design services, and suggests a decline in CRE investment through most of 2021 (This usually leads CRE investment by 9 to 12 months).

The weakness over the last year was not surprising since certain segments of CRE are struggling, especially offices and retail.