Is 2021 actually… better? It appears that way, at least for architectural services demand. This morning, the AIA released the March 2021 Architecture Billings Index (ABI) figures, pointing to a second consecutive month of strong growth.
The February ABI hit 53.3 (anything over 50 is an increase from the month prior, under 50 a decrease) last month, marking the first time the composite measure of billing and demand strength had trended positive since the start of the pandemic in 2020. Now, it looks like demand is really ramping up again as the March ABI hit 55.6.
“As business activity at architecture firms moves sharply toward recovery,” said AIA chief economist Kermit Baker in a press statement, “it is very encouraging to simultaneously see such positive indicators of future project work increasing in the pipeline. The activity architecture firms are seeing is a positive bellwether not only for the construction outlook, but also for the larger economy.”
How big of an improvement was there last month? While the February ABI was up overall, there were still some weak spots, particularly in region-by-region demand and in the demand for some specific project types. That’s not the case this time, as the March ABI saw every measure trend positive.
In the regional numbers, that means that demand in the Northeast, the section of the country so far hit hardest by COVID-related slowdowns and demand drops, rose to 50.8 in March from 46.9. It was a similar story in the Midwest, which rose to 56.5 from 49.3; the demand for architectural services in the South rose to 55.8 from 52.4, and the West went from 49.5 in February to 52.8.
Inquiries into new projects continued to rise once again—already a strong point in February as developers and homeowners begin looking into building again—as index rose to a whopping 66.9 from 61.2. The index of newly signed design contracts followed suit, from 51.6 to 55.7 in March. It looks like that interest is finally translating into cash transactions.
Finally, on a sector-by-sector measure, firms working on commercial and industrial projects actually saw the biggest gain in March, demand moving to 57.0 from 50.5, likely buoyed by positive vaccination figures and the promise of in-real-life foot traffic returning. Mixed-work practices continued to gain, moving up to 54.9 from 52.5 in February; institutional project demand moved from 47.8 to a positive 54.4.
Multi-family residential demand remains surprisingly weak, only moving from 48.3 in February to 52.6 in March. Are record high timber prices and increasing steel prices dampening the sector’s prospects? We’ll have to wait until the April figures are released to find out, and whether this rally will hold.