Commercial Real Estate News
Architecture Billings Decline in December as Soft Business Conditions Persist
According to the American Institute of Architects latest AIA/Deltek Architecture Billings Index, the ABI remained below 50 for December 2023, indicating soft business conditions in the U.S. to close out 2023. The score of 45.4 remained essentially flat from November 2023. Any score below 50.0 indicates decreasing business conditions but there are encouraging signs of the pipeline.
"Billings at firms declined for eight months of the year, and the last four months saw this overall weakness accelerate," said Kermit Baker, PhD, AIA Chief Economist. " Fortunately, project backlogs at firms eased only slightly through the year despite the overall reported softness in billings."
Firm billings declined at firms in all regions of the country except the Midwest in December 2023, where billings were essentially flat. Business conditions were also weak for most of the year at firms of all specializations, with firms with a multifamily residential specialization experiencing a particularly challenging year.
In addition, most firms report that over the past six months at least some of their projects have been significantly delayed, put on hold, or even cancelled. On average, almost 30% of projects on a dollar basis have fallen into one of these categories.
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.
Key ABI highlights for December include:
- Regional averages: Northeast (45.9); Midwest (50.3); South (43.4); West (45.3)
- Sector index breakdown: commercial/industrial (46.4); institutional (46.5); mixed practice (firms that do not have at least half of their billings in any one other category) (42.3); multifamily residential (45.8)
- Project inquiries index: 53.1
- Design contracts index: 50.0
- The regional and sector categories are calculated as three-month moving averages and may not always average out to the national score
