by Calculated Risk on 1/25/2023 10:06:00 AM
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture billings continue to decline
The pace of decline during December slowed from November, posting an Architecture Billings Index (ABI) score of 47.5 from 46.6 (any score below 50 indicates a decline in firm billings). Inquiries into new projects posted a positive score of 52.3, however new design contracts remained in negative territory with a score of 49.4.
“Despite strong revenue growth last year, architecture firms have modest expectations regarding business conditions this coming year,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “With ABI scores for the entire fourth quarter of 2022 in negative territory, a slowdown in construction activity is expected later this year, though the depth of the downturn remains unclear.”
o Regional averages: Midwest (49.4); South (48.6); Northeast (46.5); West (45.5)
o Sector index breakdown: mixed practice (54.8); institutional (47.3); commercial/industrial (45.2); multi-family residential (44.3)
This graph shows the Architecture Billings Index since 1996. The index was at 47.5 in December, up from 46.6 in November. Anything below 50 indicates contraction 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 positive for 20 consecutive months but indicated a decline the last three months. This index usually leads CRE investment by 9 to 12 months, so this index suggests a pickup in CRE investment in early 2023, but a slowdown in CRE investment later in 2023.