Is the architecture industry finally turning a corner? Either that, or we’ve finally hit the rock bottom first predicted in March when the Architecture Billings Index (ABI) saw a historic downswing. The September 2020 figures, released today by the AIA, actually saw growth in some categories (relative to last month) for the second straight month since March, even though the overall ABI still clocked negative.
Last month, the ABI—a composite of regional averages, design demand by sector, project inquiries, and existing design contracts—hit 47.0. That’s still a decline from August (anything under 50 is trending negative, anything over 50, positive), but represents a less steep decline than August’s 40.0 (a drop from July, and so on).
Although revenue continued to decline, one bright spot in last month’s Architecture Billings Index was that the project inquiries index, which follows demand for new work, increased for a second straight month, up to 57.2 in September from 51.6 in August. Are developers and homeowners finally ready to start building again despite the surge in coronavirus cases across America?
However, despite the increase in interest, the design contracts index (indicating projects that were actually signed), dipped again, coming in at 48.9 last month, a slight “improvement” over August’s 46.0.
On a sector-by-sector basis, the demand for multi-family residential projects also rose, coming in at 54.0 in September, finally breaking positive after showing 49.4 in August (there’s still a housing crisis!). Mixed-use firms saw demand in September continue to trend negative, coming in at 47.3 (versus 44.0 in August), while institutional demand, typically a safe harbor, remained low at 40.5, a slight improvement from the 40.2 reported in August. Commercial and industrial demand remained low as well, at 43.3 in September, a better showing than the 35.5 in August.
Regionally, the Midwest and West tied in September at 45.6, much better than their respective showings of 41.7 and 41.3 in August; in the South, demand moved from 41.6 in August 43.7 in September, and in the Northeast continued to perform the worst, showing at 41.5 in September, up from 33.9 in August.
“Despite the multi-family residential sector showing signs of improvement, overall business conditions are recovering at a disappointingly slow pace,” said AIA chief economist Kermit Baker in a press release. “Other sectors may begin to stabilize in the coming months, but across the board improvement shouldn’t be expected until the economic impact of the pandemic subsides significantly.”