AIA Points to Major Downturn in Commercial Construction

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Robison Wells

According to the American Institute of Architects, the demand for design services saw its biggest plunge in recorded history in the month of March. Billings at architecture firms dropped 20.1 points to 33.3, the largest single-month decline in the 25 years that the Institute has been keeping track. By comparison, in the 2001 recession there was a 9.4 decline, and in 2008 an 8.3 decline.

The report, which was released on April 22nd, indicated that billings were down across all regions of the country and all specializations. Likewise, new project inquiries and new design contracts dropped by 23.8 points and 27.1 points, respectively.

The dramatic drop in the demand for architectural services is particularly alarming for the construction sector, as these billings are the bellwethers of what is coming toward the industry. Dodge Data & Analytics Chief Economist Richard Branch said "A pullback in new jobs and delays to ongoing projects will lead to a sharp retreat in activity across virtually every sector of the construction industry.”

The drop may not be immediate. "Construction activity tends to lag the broader economy by 12 to 18 months, so that weakness will eventually catch up with the construction sector," said American Builders and Contractor’s Chief Economist Anirban Basu.

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