{"id":1004450239,"date":"2020-05-21T02:26:05","date_gmt":"2020-05-21T10:26:05","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004450239"},"modified":"2020-06-25T03:16:29","modified_gmt":"2020-06-25T11:16:29","slug":"architectural-billings-reveal-continued-decline-in-business","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/architectural-billings-reveal-continued-decline-in-business\/","title":{"rendered":"Architectural Billings Reveal Continued Decline in Business"},"content":{"rendered":"

Demand for design services has hit another record low as the COVID-19 crisis continues impacting businesses including the commercial real estate industry around the U.S., according to a new report from the American Institute of Architects. AIA\u2019s Architecture Billings Index score for April was 29.5, down from the previous low of 33.3 in March\u2014when the pandemic began forcing shutdowns across the nation\u2014and a high of 53.4 in February.<\/p>\n

The ABI is considered a bellwether<\/a> for impending non-residential construction activity. Any number below 50 indicates a decrease in billing and a score above 50 indicates an increase in firm billings from the previous month. The ABI for new project inquiries and design contracts was also down significantly, with scores of 28.4 and 27.6, respectively. The March numbers were 23.8 for new project inquiries and 27.1 for design contracts.<\/p>\n

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READ ALSO:<\/strong> CPE\u2019s Coronavirus Coverage<\/a><\/p>\n

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Kermit Baker, AIA chief economist, said in prepared remarks the dramatic deceleration is not surprising, adding it looks like businesses and homeowners are waiting for signs of stability before moving ahead with new projects. While Baker expects demand for design services to pick up fairly quickly once business activity resumes, he does anticipate there will be long-lasting consequences for some firms. Earlier this month, Baker told Commercial Property Executive<\/em> the steep declines in ABI, combined with architectural firm estimates of double-digit declines in billings for the second quarter, suggest construction activity will be down for the remainder of the year and into 2021.<\/p>\n

Regional breakdown by sector<\/h2>\n

AIA also breaks down demand for design services by regions. The April regional averages ranged from 38.1 in the West to 23.0 in the Northeast, with the Midwest tallying 31.2 and the South 31.1. The breakdown for sectors was 36.1 for institutional, 30.3 for multifamily residential, 29.0 for mixed practice and 27.8 for commercial\/industrial. The regional and sector categories are calculated as a three-month moving average and the national design contracts and inquiries are tracked monthly.<\/p>\n

The regional ABI averages for March were 45.3 in the West, 44.2 in the South, 44.2 in the Midwest and 38.4 in the Northeast. Sector index breakdown that month had institutional at 46.9, followed by multifamily residential at 43.3, commercial\/industrial at 41.9 and mixed practice at 40.6.<\/p>\n

Impact on projects<\/h2>\n

The firms were asked if projects had been negatively affected to date by the pandemic, including delays, labor and inspection availability issues and mandated work stoppages, or positively impacted including new unanticipated projects, schedules accelerated and projects expanded. Nearly all the firms\u201497 percent\u2014reported that at least some of their projects had been negatively impacted, while 43 percent reported that at least 25 percent of their projects had been negatively affected.<\/p>\n

Firms in the Northeast\u2014where the majority of construction shutdowns have occurred\u2014reported the largest share of negatively affected projects to date. The number of firms reporting positive impacts was much smaller, with 39 percent noting at least some positive impacts.<\/p>\n

Employment data<\/h2>\n

The coronavirus fallout has also affected employment levels at architecture firms. The monthly AIA survey of firms found 14 percent had furloughed employees with the hopes of bringing them back in the future, 13 percent had eliminated some positions and 11 percent had converted some architecture positions to part-time or hourly.<\/p>\n

But the news wasn\u2019t all bad. The survey showed 12 percent of firms had hired new permanent employees, 8 percent had hired students\/summer interns, 4 percent increased the hours of current employees and 3 percent hired new temporary or short-term employees.<\/p>\n