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AIA sees residential design demand derailed by coronavirus

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AIA sees residential design demand derailed by coronavirus

With COVID-19 disrupting job sites and sowing economic uncertainty, residential design work is taking a beating. (Nolan Issac/Unsplash)

The American Institute of Architects (AIA) has released its first economic examination of the damage wrought by the novel coronavirus (COVID-19) pandemic, and the results aren’t great.

This morning, the AIA sent out a press release summarizing the findings of their HDTS Special Report, painting a not-so-rosy portrait of the future. “The momentum building in the housing market since the Great Recession,” wrote the AIA, “has completely reversed itself over the course of just a few weeks.”

The AIA surveyed a number of firms working on residential projects and found that revenue in March fell on average 15 percent below what was expected, while April revenue projections were on track to come in 20 percent below expectations.

Some more key takeaways:

  • 70 percent of firms indicate that inquiries for new work declined in March.
  • 78 percent of firms have already seen slowing or stoppage of projects.
  • Around 90 percent of firms have seen problems with current projects due to COVID-19.
  • Most residential firms, about two thirds, indicated that virtually all/majority of their staff are now working remotely.
  • Residential firms anticipate accelerated revenue losses in April, with almost 70 percent expecting losses of 10 percent or more for the month relative to their expectations in early March.

A number of compounding issues are contributing to the slowdown. State-mandated construction freezes have stopped or slowed most residential projects (some states are allowing affordable housing construction to continue). Supply chains have been disrupted by the pandemic, and building departments have been slowing their approvals as they try to make the transition to working digitally. Of course, looming large over the heads of developers and homeowners alike is the potential of an extended economic recession that could linger well after social isolation orders have been lifted. With unemployment growing to unprecedented levels and the stock market undergoing roller coaster-like peaks and valleys on a daily basis, many prospective clients are putting a hold on future projects.

As the AIA also noted in the special report, firms with a focus on residential projects have thus far been hit the hardest; only 13 percent on non-residential-focused studios faced losses of 25 percent or higher in March. However, that may soon change as well as even institutional projects, long stalwarts for firms looking for stability, get placed on hold or canceled. New York City, for example, recently halted all public design work as it deals with the gaping hole coronavirus has blown in the budget. As noted in a recent AIANY town hall, this sort of cost-cutting measure didn’t happen even at the height of the 2008 recession, as the city tried to buoy architects with public work.