Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index moderates but remains healthy
For the twentieth consecutive month architecture firms reported increasing demand for design services in September, according to a new report today from The American Institute of Architects (AIA).
The AIA Architecture Billings Index (ABI) score for September was 51.7 down from a score of 53.3 in August, indicating essentially stable business conditions for architecture firms (any score above 50 indicates an increase in billings from the prior month). Also in September, both the new project inquiries and design contracts indexes moderated from August but remained positive with scores of 53.6 and 50.7, respectively.
“While billings in the Northeast region and the Institutional sector reached their highest pace of growth in several years, there appears to be emerging weakness in the previously healthy multifamily residential and commercial/industrial sectors, both of which saw a decline in billings for the first time since the post-pandemic recovery began,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Across the broader architecture sector, backlogs at firms remained at a robust 7.0 months as of the end of September, still near record-high levels since we began collecting this data regularly more than a decade ago.”
• Regional averages: Northeast (54.6); Midwest (52.1); South (51.7); West (51.6)
This graph shows the Architecture Billings Index since 1996. The index was at 51.7 in September, down from 53.3 in August. 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 has been positive for 20 consecutive months. This index usually leads CRE investment by 9 to 12 months, so this index suggests a pickup in CRE investment into 2023.