by Calculated Risk on 4/23/2025 06:06:00 PM
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: ABI March 2025: Business conditions at architecture firms soften further
The ABI/Deltek Architecture Billings Index dipped further from February to 44.1 in March, as even more firms reported a decline in billings from the previous month. Since the ABI first dropped below 50 in October 2022, following the post-pandemic boom, billings have declined 27 of the last 30 months. Unfortunately, this softness is likely to continue as indicators of future work remain weak. Inquiries into new work declined for the second month in March, while the value of newly signed design contracts fell for the thirteenth consecutive month. Clients are increasingly nervous about the uncertain economic outlook, and many remain wary of starting new projects at this time. However, backlogs at architecture firms remain reasonably healthy at 6.5 months, on average, which means that even though little new work is coming in currently, they still have a decent amount in the pipeline.
Firm billings continued to decline in all regions of the country in March as well. Billings were softest at firms located in the Northeast for the sixth consecutive month but also weakened further at firms located in the West and Midwest. Firms located in the South reported the smallest decline in billings. Business conditions also remained weak at firms of all specializations, with firms with a multifamily residential specialization continuing to report the softest conditions. Billings were trending stronger at firms with an institutional specialization late last year but have softened significantly since then.
…
The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
emphasis added
• Northeast (40.5); Midwest (45.5); South (48.3); West (43.0)
• Sector index breakdown: commercial/industrial (46.9); institutional (46.4); multifamily residential (40.3)
Click on graph for larger image.
This graph shows the Architecture Billings Index since 1996. The index was at 45.5 in February, down from 45.6 in January. Anything below 50 indicates a decrease in demand for architects’ services.
Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.
This index usually leads CRE investment by 9 to 12 months, so this index suggests a slowdown in CRE investment throughout 2025 and into 2026.
Multi-family billings remained negative has been negative for the last 32 months.  This suggests we will see continued weakness in multi-family starts.
