From the AIA: Demand for design services decreases considerably
Demand for design services from architecture firms softened considerably in October, according to a new report from The American Institute of Architects (AIA).
AIA’s Architecture Billings Index (ABI) score for October was 47.7, the first decline in billings since January 2021 (any score below 50 indicates a decline in firm billings). Inquiries into new projects continued to grow in October with a score of 52.3, while the value of new design contracts declined, with a score of 48.6.
“Economic headwinds have been steadily mounting, and finally led to weakening demand for new projects,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Firm backlogs are healthy and will hopefully provide healthy levels of design activity against fewer new projects entering the pipeline should this weakness persist.”
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• Regional averages: Midwest (50.8); South (50.6); Northeast (50.3); West (49.6)• Sector index breakdown: institutional (54.3); mixed practice (50.8); multi-family residential (46.1); commercial/industrial (45.9)
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Click on graph for larger image.
This graph shows the Architecture Billings Index since 1996. The index was at 47.7 in October, down from 51.7 in September. 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. This index usually leads CRE investment by 9 to 12 months, so this index suggests a pickup in CRE investment in early 2023, but if the weakness persists – a slowdown in CRE investment later in 2023.