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Commercial Construction Indicator Nudges Up In February

CRE Design Activity, Multifamily Building Boom Fuel Construction Growth
March 19, 2014
Billings for work on the books by architecture firms increased slightly in February despite the idling of business and construction activity by bad weather in many areas, according to the Architecture Billings Index.

Published monthly by the American Institute of Architects, the ABI was 50.7 in February, compared with 50.4 in January. Increases in the in the Northeast and Midwest were offset by declines in the South and West.

Unusually severe weather in many parts of the country "have obviously held back both design and construction activity," even as the improving economy is causing developers to resurrect stalled projects, said AIA Chief Economist Kermit Baker.

"The March and April readings will likely be a better indication of the underlying health of the design and construction markets," Baker said. "We are hearing reports of projects that had been previously shelved for extended periods of time coming back online as the economy improves."

The new projects inquiry index was 56.8 in February, down from 58.5 the previous month.

Any score above 50 indicates an increase in billings to architecture firms, a predictor of nonresidential construction activity nine to 12 months in the future.

Evidence abounds that after years of frozen or slow activity, the economic recovery is finally beginning to provide a lift to the design, property development and construction industries as the existing inventory of commercial property is absorbed.

Demand for new commercial construction have finally accelerated into recovery across virtually all property types and U.S. regions, and builder sentiment reflects it, according to two new reports from Wells Fargo. Wells Fargo Equipment Finance, the financial institution said contractors and equipment distributors are optimistic that local non-residential construction activity will improve in 2014 compared to the prior year.

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