Architecture Billings Index Moves Into Negative Territory

The Architecture Billings Index (ABI) dipped slightly into negative territory in January, after a strong showing in December. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI score was 49.5, down from a score of 55.6 in the previous month. This score reflects a minor decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60, up from a reading of 57.6 the previous month.

“This decrease in activity, taking into consideration strong readings in project inquiries and new design contracts, isn’t exactly a cause for concern,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The fundamentals of a sound nonresidential design and construction market persist.”

Key January ABI highlights:

  • Regional averages: South (54.2), Northeast (53), Midwest (52.4), West (48.8)
  • Sector index breakdown: institutional (54.6), commercial / industrial (53.4), mixed practice (48.1), multi-family residential (48.1)
  • Project inquiries index: 60
  • Design contracts index: 52.1

MCA Recognizes Eight Building Projects at Awards Show

Selected by a panel of professional architects, eight building projects from across the country have been recognized by the Metal Construction Association (MCA) at the 2017 Chairman’s Awards show.

Announced at the MCA’s winter meeting held in Weston, Fla., the Chairman’s Awards are given to the year’s most exceptional building projects involving MCA member companies. Awards are based on overall appearance, significance of metal in the project, innovative use of metal, and the role of metal in achieving project objectives.

The MCA Chairman’s Awards were given in eight categories: overall excellence; residential; metal roofing; education, primary and secondary schools; education, colleges and universities; institutional; municipal; and commercial/industrial.

The 2016 Chairman’s Award winners in each category were:

Recipients for these awards are selected each year from projects submitted by MCA members to “Metal Architecture Magazine’s” annual Design Awards Program. The honorees were chosen by a panel of professional architects, which included Mark Dewalt, AIA, principal, Valerio Dewalt Train Associates, Chicago; Mark Horton, FAIA, principal, Mark Horton/Architecture, San Francisco; Brent Schipper, AIA, LEED AP, principal, ASK Studio, Des Moines, Iowa.

Architecture Billings Index Concludes Year With Positive Growth

The Architecture Billings Index (ABI) concluded the year in positive terrain, with the December reading capping off three straight months of growth in design billings. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 55.9, up sharply from 50.6 in the previous month. This score reflects the largest increase in design services in 2016 (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.2, down from a reading of 59.5 the previous month.

“The sharp upturn in design activity as we wind down the year is certainly encouraging. This bodes well for the design and construction sector as we enter the new year”,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “However, December is an atypical month for interpreting trends, so the coming months will tell us a lot more about conditions that the industry is likely to see in 2017.”
 
Key December ABI highlights:

  • Regional averages: Midwest (54.4), Northeast (54.0), South (53.8), West (48.8)
  • Sector index breakdown: commercial / industrial (54.3), institutional (53.3), mixed practice (51.9), multi-family residential (50.6)
  • Project inquiries index: 57.2
  • Design contracts index: 51.2

 
The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

AIA Supports Legislation for Energy Efficiency Tax Incentive

The American Institute of Architects (AIA) has voiced its support of bipartisan legislation that makes designers of hospitals, schools, tribal community facilities and other non-profits eligible for an energy efficiency tax incentive that is already saving tax-payers money across the country.

H.R. 6376, introduced by Rep. Dave Reichert (R-WA) and co-sponsored by Rep. Tom Reed (R-NY), Rep. Earl Blumenauer (D-OR), and Rep. Chris Van Hollen (D-MD), also modifies Section 179D of the tax code, the Energy-Efficient Commercial Building Deduction, to make small to midsized architect firms organized as subchapter S corporations eligible for the deduction.

“H.R. 6376 gives non-profits the ability to allocate this energy savings tax incentive to designers,” said AIA President Russell Davidson, FAIA. “It also provides an opportunity for schools and hospitals to save money when architects deploy technologies that make buildings more energy efficient.” 

The section 179D tax deduction was originally passed by Congress as part of the Energy Policy Act of 2005 in direct response to broader energy usage and independence concerns. According to data released by the U.S. Department of Energy, buildings are responsible for 73 percent of all electricity consumption in the U.S., with about half of that coming from commercial buildings.

In an effort to curb this trend and encourage broader energy efficiency, section 179D allows qualifying building owners and businesses to receive an up to $1.80 per square foot tax deduction for their energy efficient buildings placed into service during all open tax years.

Architects can also qualify for 179D under a special rule for public property, if they’ve enhanced the energy efficiency of a new government-owned building or made energy-saving renovations and retrofits to existing government-owned buildings. As government entities do not traditionally pay tax, the owners of these buildings can allocate the accrued tax savings to architects who have designed the energy-saving improvements.

AIA Survey Findings About American Attitudes Toward Public Buildings

A survey by the American Institute of Architects (AIA) finds that a majority of Americans (83 percent) consider public buildings—schools, libraries, community centers, and parks—part of their community’s infrastructure. And, 94 percent of those surveyed say that having well-maintained public buildings are important to the future of their community.

In a key finding for policy makers, 83 percent of survey respondents agreed that investment in these public buildings is just as important as investment in roads and bridges. The survey also found that seven in 10 Americans want their public buildings renovated, and almost three-quarters of Americans consider public schools in good condition a “must have” in the communities in which they live.

These are some of the main findings of the first AIA survey of American attitudes toward essential community buildings. The survey results, conducted by The Harris Poll, were made public at the AIA Build America Summit.

“The survey findings are a clarion call to policy makers at all levels of government that Americans not only want safe roads and bridges, but also desire a serious financial commitment to public buildings that mirror and contribute to the communities in which they live,” says AIA President Russell Davidson, FAIA.

“The purpose of the Build America Summit is to expand the infrastructure discussion to include funding to repair, restore, and adapt the essential public buildings that give communities character,” states Davidson, who conceived the Summit. Nearly 40 speakers and 350 attendees from design and construction, real-estate, education, development, and government will develop recommendations that will be shared with the incoming Presidential Administration and made available to state and local governments and community leaders.

Survey findings:

More than three in four Americans (78 percent) think their local government should take some financial responsibility for supporting the investment in their public buildings. Just under two-thirds (61 percent) think state government should take some financial responsibility. A majority (53 percent) think that community members should support it, and almost half (46 percent) believe private entities should also invest.

A majority of Americans believe that the condition of community buildings can lead to notable benefits, particularly higher property values (60 percent) and improved quality of education (62 percent).
Sixty-nine percent of Americans believe schools are one of the most important buildings to receive a consistent level of public funding.

On average, Americans feel about one third (34 percent) of public funds budgeted for community features should be allocated to public buildings and/or spaces. Of the remaining, they would allocate 37 percent to transportation and 29 percent to public housing.

Gender differences exist in attitudes toward public buildings and spaces. For example, women are more inclined than men (44 percent to 34 percent) to consider public housing options a “must have.” Conversely, older men (44 percent) place the most emphasis on funding transportation.

Almost half those surveyed (48 percent) believe public housing (defined as a combination of senior and affordable housing) is one of the most important community features to receive a consistent level of public funding.

“It is clear from the survey that Americans consider investment in community buildings and spaces a priority,” says AIA CEO Robert Ivy, FAIA. “Not only do they believe that that investment would lead to improvements in property value, education, and public safety, but also serve to attract new businesses and enhance their overall quality of life.”

A copy of the survey results can be found here

ABI Reports Increase in Design Services Demand

After seeing consecutive months of contracting demand for the first time in four years, the Architecture Billings Index (ABI) saw a modest increase demand for design services.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 50.8, up from the mark of 48.4 in the previous month. This score reflects a slight increase in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 55.4, down from a reading of 59.4 the previous month.

“There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “Hopefully we’ll get a sense of what direction we will be headed once we get a clearer read on how the new administration’s policies might impact the overall economy as well as the construction industry.”

October ABI highlights:

  • Regional averages: South (53.7), West (49.7), Northeast (47.3) Midwest (46.8)
  • Sector index breakdown:  multi-family residential (51.2) commercial/industrial (49.8), mixed practice (49.5), institutional (49.1)
  • Project inquiries index: 55.4
  • Design contracts index: 48.7

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

ATAS National Sales Manager Receives Award

Mark Bus, national sales manager of ATAS International, received a Metal Construction Association Triumph Award at METALCON in Baltimore.  He was recognized as being someone who demonstrates excellence, creativity and initiative in his or her business or profession.
 
Jim Bush, vice president of Sales and Marketing states, “I have had the pleasure of watching Mark mature over the years to a young and emerging professional; not only within ATAS but also in the industry.  He has earned the respect of the ATAS sales team, as well as peers and management, through hard work and a sound decision making process.  Mark is also aware of industry initiatives and association activities and brings those into daily communications with staff and customers.”
 
An ATAS distributor, Allan Brock of Brock Associates, says, “During my forty year tenure in the commercial metal roofing and siding industry, I have rarely crossed paths with a young professional like Mark Bus.  I have seen Mark evolve from an inside technical sales person, to a regional product representative, to management.  At each level, he radiated professionalism along with product and technical knowledge.  It’s been a pleasure dealing with an individual as capable as Mark.”
 
Robert J. Bailey, AIA, CSI, CCS, LEED AP, specifications and constructability specialist with IKM Inc., also recommended Mark Bus for this award.  “Mark makes it a point to understand the people who are specifying and purchasing ATAS products.  As a new product rep in western Pennsylvania, he became involved in various CSI (Construction Specifications Institute) chapters.  It was clear to me that Mark knew in order to be prepared for a leadership role in ATAS, he first needed to understand the industry itself and establish important contacts and relationships there.  Mark is an example for other young sales professionals.”

AIA Issues 2016 Election Results Statement

The American Institute of Architects (AIA) has issued the following statement on the election of Donald Trump as President of the United States, as well as the incoming 115th Congress.

“The AIA and its 89,000 members are committed to working with President-elect Trump to address the issues our country faces, particularly strengthening the nation’s aging infrastructure. During the campaign, President-elect Trump called for committing at least $500 billion to infrastructure spending over five years. We stand ready to work with him and with the incoming 115th Congress to ensure that investments in schools, hospitals and other public infrastructure continue to be a priority,” states AIA Chief Executive Officer Robert Ivy, FAIA.

“We also congratulate members of the new 115th Congress on their election. We urge both the incoming Trump administration and the new congress to work toward enhancing the design and construction sector’s role as a catalyst for job creation throughout the American economy.”

Robert Ivy concludes, “This has been a contentious election process. It is now time for all of us to work together to advance policies that help our country move forward.”

Firm Leaders Reinvest and Expand Businesses as Profitability Increases

U.S. architecture firms have experienced a near complete recovery from the Great Recession, which has allowed firm leaders to reinvest profits back into their businesses. These findings, along with an in depth look at topics such as firm billings, staffing, and international work, are covered in the “The Business of Architecture: 2016 Firm Survey Report”.  The report offers metrics that provide insights into how architecture firms are operating and is available for purchase here.

“More than at any point in recent memory, there has been rise in the amount of renovation projects that architects have led compared to new construction activity over the past decade plus,” said AIA chief economist, Kermit Baker, Hon. AIA, PhD.  “A lot this has to do with green building incentives towards renovations, improved construction methods and products that increase the longevity of buildings, and a slower growing population that reduces the need for new construction.”

Key highlights:

  • Net billings at architecture firms were $28.5 billion at the peak of the market in 2008 and had nearly recovered to $28.4 billion by 2015.
  • Percentage of firms reporting a financial loss declined sharply in recent years from more than 20 percent in 2011 to fewer than 10 percent by 2015.
  • Growing profitability has allowed firms to increase their marketing activities and expand into new geographical areas and building types to diversify their design portfolios.
  • Renovations made up a large portion of design work with 45 percent of building design billings coming from work on existing facilities, including 30 percent from additions to buildings, and the remaining from historic preservation projects.
  • Billings in the residential sector topped $7 billion, more than 30 percent over 2013 levels.
  • Modest gains in diversity of profession with women now comprising 31 percent of architecture staff (up from 28 percent in 2013) and minorities making up 21 percent of staff (up from 20 percent in 2013).
  • Use of Building Information Modeling (BIM) software has become standard at larger firms with 96 percent of firms with 50 or more employees report using it for billable work (compared to 72 percent of mid-sized firms and 28 percent of small firms).
  • Newer technologies including 3D printing and 4D/5D modeling are reported being used at only 11 percent and 8 percent of firms respectively.
  • Energy modeling currently has a low adoption rate with 13 percent of firms using it for billable work, although this share jumps to 59 percent for large firms.

“From a practice standpoint, digital modeling is firmly entrenched in the early phase of design work and expanding into subsequent phases, with the potential for more involvement for architects through the construction and facility management processes,” said AIA senior director of research, Michele Russo. “In the coming years we expect firms will be adding technological dimensions to their design work through more utilization of cloud computing, 3D printing and the use of virtual reality software. This should help further efficiencies, minimize waste and project delivery delays, and lead to increased bottom line outcomes for their clients.”

ABI Posts Decline in Demand for Design Services

The Architecture Billings Index (ABI) posted consecutive months of a decline in demand for design services.  As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the September ABI score was 48.4, down from the mark of 49.7 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 59.4, down from a reading of 61.8 the previous month.

“This recent backslide should act as a warning signal,” states AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “But this drop-off in demand could be continued hesitancy in the marketplace to move forward on projects until the presidential election is decided. The fact that new work coming into architecture continues to slowly increase suggests that billings will resume their growth in the coming months.”

Key September ABI highlights

  • Regional averages: South (53.4), Midwest (50.1), West (49.5), Northeast (44)
  • Sector index breakdown: commercial/industrial (50.4), mixed practice (49.8), institutional (49), multi-family residential (48.8)
  • Project inquiries index: 59.4
  • Design contracts index: 51.4

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.