Architecture firms have work on the drawing board

The Washington-based American Institute of Architects (AIA) says its monthly billings index for July points to continued construction planning activity into the second half of this year.

“Although the torrid pace of billings growth seen earlier this year eased in July, architecture firms are still reporting very strong business conditions overall,” writes AIA about its architectural billings index (ABI) for the month.

The ABI score of 54.6 for the month indicates “the majority of firms are continuing to see their billings increase,” adds AIA. “The rate of growth that firms are reporting now is more typical for a post-recession recovery phase, while the exceptionally high numbers seen earlier this year were more of an aberration due to the precipitous nature of the decline in 2020, and the commensurately strong rebound in early 2021,” adds the institute.

AIA says business conditions remained strong in all regions of the United States in July, with firms located in the Midwest and West reporting the strongest conditions for the second consecutive month.

Architectural services employment added 300 new jobs in June (the most recent data available), with employment in the industry now 2 percent below its pre-pandemic high, according to AIA.

Adds the organization, “Although inflation remains an area of concern, recent data shows that it may end up being more transitory in nature. While the most recent Consumer Price Index (CPI) data showed that consumer prices rose an additional 0.5 percent in July, that is nearly half of the increase of 0.9 percent that was seen in June.”

The Arlington, Virginia-based Associated General Contractors of America (AGC) continues to express its concern about inflation, particularly pertaining to building materials. In early August, AGC’s chief economist, commented, “Contractors are plagued by soaring materials costs, long or uncertain delivery times, and hesitancy by project owners to commit to construction.”

AIA characterizes architecture firms, however, as optimistic about revenue in second half of 2021. “Conditions look even rosier for the second half of the year, with 54 percent of firms expecting an increase in revenue in the second half of 2021 in comparison to the first half, for a projected average increase of 6 percent,” writes AIA. That compares with just 15 percent of its members expecting a decrease in revenue.

“The pickup in work has been as radical as the drop-off in work in March and April of 2020,” a billings index respondent with a 250-person firm in the Midwest tells AIA.

An AIA member in the South, however, calls conditions “good, but [there is] still some hesitancy. COVID and the delta variant are still causing issues, and concerns on moving forward.”

AGC, in addition to citing inflation concerns, also cites the COVID-19 delta variant as a negative factor. “The fast-spreading COVID-19 delta variant may make it harder to find employees eligible to work on restricted sites and may also depress demand if some owners defer projects,” says Simonson.