According to the American Institute of Architects, commercial building has reached its highest point since 2007. The Architectural Billings Index, which is used to predict construction spending for the next 9-12 months, scored the current market at 55.8. Scores of 50 or higher indicate market growth. According to AIA chief economist Kermit Baker, “We’re going to see some reasonably healthy numbers for architecture billing.”
While the commercial and residential markets are strong, the institutional market, which includes hospitals, government buildings, and schools, has been lagging somewhat. Although institutional construction did pick up later in the fiscal cycle, Baker said that the lag is “holding back a broad-based recovery.”
The Index projections indicate that demand for manufacturing, retail, hotel, and distribution will increase to about 8% in 2015. The institutional market is expected to improve in 2015 as well. The architectural billings will doubtless increase as long as client confidence in the economy remains high.
Regional scores for the index also indicate market gains in each area, with 55.5 in the Northeast, 55.1 in the South, 54.1 in the Midwest, and 53.5 in the West. The gains were particularly strong in the West, which saw a jump from 48.7 in June, bringing an end to the 3-month slump in that regional market. The South continues its reign as leader in new design activity, having shown steady increases for 25 consecutive months.
The Architectural Billings Index is taken from AIA’s Work-on-the-Boards Survey and Panel, a monthly study conducted by the AIA’s Economics and Market Research Group. The survey tracks an architectural firm’s availability to engage additional work as well as the rate of billings as compared do the previous month.