Good news for the Midwest's designers and builders. For a second consecutive month, the region led the nation in architectural billings in July, according to the American Institute of Architects (AIA) Architectural Billings Index. Good news for designers and builders nationwide, as well. For a second consecutive month, all U.S. Regions demonstrated positive growth in billings.
The Index, which reflects a nine to 12-month lead time between billings and construction spending, was off June's eight-year high 55.7, but nevertheless posted a healthy 54.7. An ABI score of 50 or more denotes growing demand for design services.
By region, the Midwest scored 58.2, besting its June total of 57.2. Economists generally attribute favorable conditions in the region to a resurgent Michigan, steady growth in the industrial sector and pent up demand, given the Midwest long lagged other regions in the nation's economic recovery.
By comparison, the South scored 55.7, followed by the West with 53.8 and Northeast by 53.5
By sector, the institutional led with a score of 57.3, followed by mixed practice (56.8), commercial/industrial (53.4) and multi-family residential (49.8). As AIA Chief Economist Kermit Baker noted last month, the multi-family index has been on a slide all year, with July marking a second consecutive month of negative growth. The score comports with speculation that demand for multifamily housing may have crested.
In general, the industry appears to be benefiting from owners and developers that have brushed the dust off projects they earlier mothballed, according to Baker.
“On top of what has been a flurry of design activity in recent months, some architects are reporting a break in the logjam created by clients placing projects on hold for indefinite periods, which bodes well for business conditions in the months ahead,” says AIA Chief Economist Kermit Baker.
But what good would good news be without a fly in the oinment?
“There is some uneasiness in the design community that rapid growth in construction costs could escalate beyond development capital and municipal budgets, which could trigger some contraction in the marketplace down the road,” Baker says.