by Calculated Risk on 4/21/2021 10:37:00 AM

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

From the AIA: Demand for design services continues to rapidly escalate

Strengthening to a score not seen since pre-Great Recession, the Architecture Billings Index (ABI) logged its second positive mark since the beginning of the pandemic, according to a new report today from The American Institute of Architects (AIA).

AIA’s ABI score for March rose to 55.6 compared to 53.3 in February (any score above 50 indicates an increase in billings). Scores for both new projects inquiries and new design contracts strengthened to 66.9 and 55.7 respectively. March also marked the first time in three years all building sectors and regions posted positive scores.

“As business activity at architecture firms moves sharply toward recovery, it is very encouraging to simultaneously see such positive indicators of future project work increasing in the pipeline,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The activity architecture firms are seeing is a positive bellwether not only for the construction outlook, but also for the larger economy.”
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• Regional averages: Midwest (56.5); South (55.8); West (52.8); Northeast (50.8)

• Sector index breakdown: commercial/industrial (57.0); mixed practice (54.9); institutional (54.4); multi-family residential (52.6)
emphasis added

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 55.6 in March, up from 53.3 in February. 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 had been below 50 for eleven consecutive months, but has been solidly positive for the last two months.  

The eleven months of decline represented 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), however we might see a pickup in CRE investment towards the end of the 2021.