“It’s like déjà vu all over again,” AIA chief economist Kermit Baker said of the steep springtime drop reflected in May’s Architectural Billings Index (ABI). Baker was referring to the trend from 2011, when design activity took a substantial hit after an initially healthy first quarter. “But we don’t want to have a repeat of last year,” he added referring to the sluggish numbers that continued to shadow the profession through the fall. The new numbers were the worst since October and, Baker said, reflect trends in the larger economy.
For the past five months things were looking up for the Architecture Billings Index. Until now. Granted, the index was merely teetering on the positive side of the spectrum at 50.4 for March (any score above 50 reflects an increase), so it didn’t have far to drop into the negative territory of 48.4 for April. Despite the five-month positive stint, throughout the period AIA Chief Economist, Kermit Baker urged cautious optimism in what has clearly been a tepid recovery. In a statement released today, he said that the decline in demand for design services is not surprising considering continued volatility in the overall economy. “Favorable conditions during the winter months may have accelerated design billings, producing a pause in projects that have moved ahead faster than expected,” he said.
The Architecture Billings Index (ABI) has registered promising gains since late last fall, and, according to the AIA’s latest report on March billings, the ABI continues to find its footing in positive territory—but just barely. The overall March score was 50.4, indicating slight growth in demand for services (any score above 50 reflects increase in billings) but less growth than the previous month (the ABI was 51.0 in February).
The Architecture Billings Index is up, hitting 52.0 in November, the first positive ground since touching 51 in August (anything over 50 indicates an increase in billings). The roller-coaster volatility of the past few months—we held our breath and skipped reporting September’s down and October’s up—suggests cautious optimism that the index which tracks the approximate nine-month lag time between architecture billings and construction spending is finally in a solid swing upwards.
While a number of new rental towers have been announced in recent months, Crain’s has an informative article about a number of Chicago condominium developers who are beginning to build again, albeit at a very small scale and in tightly phased sequences. Even for projects as small as 14 units, banks are demanding projects be split into two phases, six units first, followed by eight in a second building. Some developers are also willing to accept lower offers from buyers for higher down payments up front. The thinking reflects new stricter lending standards and continuing economic uncertainty. But with Chicago’s condo market still over-saturated and the foreclosure crisis just beginning to wane, it also reflects a much needed correction from previous patterns of over building and over lending. And, pardon me Mr. Burnham, but isn’t incremental city-making and infill development often the best approach?
Just after 4:00p.m. Sunday afternoon, cryptic messages visible for miles around Manhattan were written in the sky, spelling out, among other things, “Last Chance.” Out of context to millions in the streets below, the messages were slightly unnerving and deliberately vague. Curious speculation as each giant letter was traced into the sky led many to wonder what the message actually meant: An ad? A terrorist’s warning? A persistent marriage proposal? It turns out the display was part of an art project by Kim Beck called The Sky Is the Limit/NYC and sponsored by the Friends of the High Line.
They’re back! Positive numbers for the Architecture Billings Index (ABI) jumped up in August to 51.4 from a dismal 45.1 in July where it had been stewing in negative land for months. (Anything over 50 indicates positive growth.) Together with a sharp rise as well in Project Inquiries to 56.9 (up from 53.7), the good news seems cautiously solid. “This turnaround in demand for design services is a surprise,” said AIA Chief Economist Kermit Baker. Regional averages, however, remained below the positive bar across the country indicating that firms generally are still struggling. These numbers predate the next injection of stimulus money—whatever shape it takes—which will be sure to give another jolt. Unless, of course, billings are tracking the roller-coaster antics of the stock market.
“The stock market is doing what the economy is doing which is not moving solidly in one direction, either way,” Baker said by phone. “The stop-start that we have seen over the past two years is going to stay with us. I would love to believe that these latest numbers are the start of a Grand Recovery. And maybe they are. The evidence is just not there yet to be sure.”
According to Crain’s New York, the city’s five biggest firms began rehiring last year. Kohn, Pederson Fox, Perkins Eastman, Gensler, HOK, and SOM all began staffing-up, though all five firms pointed to international work as driving much of the growth. “New York started coming out of the recession earlier than the rest of the country, and business is improving, but it’s still uneven,” Bradford Perkins, chairman and chief executive of Perkins Eastman, told the business journal. Perkins Eastman added around 30 architects last year. Nationally, billings have been back in positive territory for the last few months, though results vary substantially by region. And today the AP reported that new home construction is beginning to bounce back. Are you feeling a rebound?
The Architecture Billing Index (ABI) dropped nearly four points in January, but just managed to stay in positive territory with a score of an even 50 (any score below 50 indicates shrinking billings). The new projects enquiry index also fell significantly from 61.6 in December to 56.5 in January, but remained comfortably in positive territory. Even with the fall in the indexes, the AIA believes the overall trend is stable with mild growth.
While signs of economic recovery are beginning to show for architects, design publishers continue to struggle to adjust to the changing media landscape and the soft economy. The parent companies of The Architect’s Newspaper‘s two major competitors, Architectural Record‘s McGraw-Hill and Architect‘s Hanley Wood, both announced major restructurings this week. According to Folio, McGraw-Hill is folding New York Construction, Midwest Construction, and its other regional titles into Engineering News-Record and turning ENR into a regional publication while eliminating up to 2,000 jobs across the company. At Record, this also meant letting go of some senior editorial staff, AN learned yesterday. Meanwhile, Hanley Wood’s president, Peter Goldstone, has been let go and his position has been eliminated, Folio also reported.
UPDATE: A spokesperson for McGraw-Hill wrote to dispute that the company is eliminating 2,000 jobs. While she declined to give a number, she said that the 2,000 figure is, “completely inaccurate.” She also clarified that ENR will “continue to be a national publication, but now it also has regional supplements.”