Mired in historically low levels for nearly half a year, architectural billings rebounded slightly in March, offering a sign of optimism to the real estate industry, according to the American Institute of Architects (AIA), a Washington D.C.-based trade group. The Architecture Billings Index, which compares data from AIA’s monthly survey of its members against construction figures from the Department of Commerce, is regarded as a leading economic indicator that provides a nine- to 12-month look at the future of construction activity.
While the overall billing index climbed from 35.3 in February to 43.7 in March, the score still indicates an overall decline in demand for design services. The multifamily sector scored a 39.4, behind the institutional (42.9) and mixed-practice (44.0) sectors, but ahead of commercial and industrial (35.0) businesses. Still, multifamily has been showing a faster recovery—bouncing up nearly 10 points in one month from an all-time low of 29.5 in February.
“We’ve never seen numbers in the low- to mid-30s like we saw in the fourth quarter of last year and the first couple months of this year,” says AIA chief economist Kermit Baker. “What we are seeing now is hopefully the early signs of a turnaround.”
Dallas-based multifamily design firm Humphreys & Partners Architects has seen strong activity through 2009 thus far as a result of marketing efforts supported by federal lending into the multifamily space. “The last quarter of 2008 was a frozen market and nothing happened,” says company CEO Mark Humphreys. “As the market settles down, we’ve had 20 to 25 HUD submittal packages that we have just done or are doing. May and June billings look to be increasing by about 15 percent.”
Still, Baker worries that excess for-sale inventory could continue to pressure demand for new rental units, particularly in overbuilt markets such as Southern California, Las Vegas, Phoenix, and South Florida.