AIA: "Billings remain soft at architecture firms as interest in new projects wanes"

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: ABI February 2025: Billings remain soft at architecture firms as interest in new projects wanesThe AIA/Deltek Architecture Billings Index (ABI) score was 45.5 for the month, indicating that a majority of firms are still experiencing declining firm billings. Billings were flat early in the fourth quarter of 2024 but have softened significantly since then. February also marked the first month since the height of the pandemic in 2020 that inquiries into new projects at firms have declined. Inquiries can be as formal as an RFP or RFQ from a potential client, or as informal as a discussion about a potential project, and rarely decline, even during periods of economic softness. The decline this month likely reflects the ongoing uncertainty about the economy at this time. In addition, the value of new signed design contracts decreased at firms for the twelfth consecutive month in February, as clients also remain hesitant to commit to new projects at this time. Billings remained soft in all regions of the country in February as well. While firms located in the West reported modest growth throughout the fourth quarter of 2024, business conditions there have softened somewhat since then. Billings remained weakest at firms located in the Northeast, with more moderate declines in billings reported at firms located in the Midwest and South. Business conditions were also weak across firms of all specializations this month, remaining softest at firms with a multifamily residential specialization for the second consecutive month. ... The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients. emphasis added• Northeast (41.3); Midwest (45.2); South (47.6); West (48.1) • Sector index breakdown: commercial/industrial (46.9); institutional (46.4); multifamily residential (46.1) Click on graph for larger image. This graph shows the Architecture Billings Index since 1996. The index was at 45.5 in February, down from 45.6 in January. Anything below 50 indicates a decrease in demand for architects' services.This index has indicated contraction for 27 of the last 29 months. 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 usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment in 2025.Multi-family billings remained negative has been negative for the last 31 months. This suggests we will see further weakness in multi-family starts.

Mar 19, 2025 - 21:14

AIA: "Billings remain soft at architecture firms as interest in new projects wanes"

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: ABI February 2025: Billings remain soft at architecture firms as interest in new projects wanes

The AIA/Deltek Architecture Billings Index (ABI) score was 45.5 for the month, indicating that a majority of firms are still experiencing declining firm billings. Billings were flat early in the fourth quarter of 2024 but have softened significantly since then. February also marked the first month since the height of the pandemic in 2020 that inquiries into new projects at firms have declined. Inquiries can be as formal as an RFP or RFQ from a potential client, or as informal as a discussion about a potential project, and rarely decline, even during periods of economic softness. The decline this month likely reflects the ongoing uncertainty about the economy at this time. In addition, the value of new signed design contracts decreased at firms for the twelfth consecutive month in February, as clients also remain hesitant to commit to new projects at this time.

Billings remained soft in all regions of the country in February as well. While firms located in the West reported modest growth throughout the fourth quarter of 2024, business conditions there have softened somewhat since then. Billings remained weakest at firms located in the Northeast, with more moderate declines in billings reported at firms located in the Midwest and South. Business conditions were also weak across firms of all specializations this month, remaining softest at firms with a multifamily residential specialization for the second consecutive month.
...
The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
emphasis added

• Northeast (41.3); Midwest (45.2); South (47.6); West (48.1)

• Sector index breakdown: commercial/industrial (46.9); institutional (46.4); multifamily residential (46.1)

Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 45.5 in February, down from 45.6 in January. Anything below 50 indicates a decrease in demand for architects' services.

This index has indicated contraction for 27 of the last 29 months.

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 usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment in 2025.

Multi-family billings remained negative has been negative for the last 31 months. This suggests we will see further weakness in multi-family starts.