Architects’ business prospects appear to have stabilized as more designs are prepared for government and education clients.
The billings score of invoices from architects and designers hit 50.1 in June, according to a monthly index compiled by the American Institute of Architects and software maker Deltek. Scores higher than 50 equate to an increase in monthly billings and a score of 50.1 means overall billing activity was essentially flat compared to May. The index reached 51 in May, marking its highest score since September 2022.
Rising interest rates, concerns about a potential recession and higher construction costs weighed on architects’ business in early 2023, according to the AIA. But things have picked up recently, said Tim Schroeder, president at Neumann Monson Architects in Iowa City, Iowa.
“We saw projects stagnating or failing to gain traction” during the first six months of 2023, Schroeder told CoStar News. “As we approached the end of the second quarter, there was a pronounced uptick in institutional opportunities, mostly government and higher education.”
The U.S. General Services Administration is directing a program to build courthouses nationwide. Neumann Monson is the design architect of record for the federal courthouse under construction in Des Moines, Iowa, located at 101 Locust St. The $140.6 million project is scheduled to be completed later this year or in early 2024.
Institutional clients, a category that covers property types including government, schools and hospitals, posted a billings score of 55.4 in June, the highest among all property types measured by the AIA. Multifamily and residential clients had the lowest score at 47.4.
Firms in the Midwest, including Neumann Monson, posted the strong growth rates in June with an index score of 52.4, according to the AIA. The Northeast region’s score was 50.6, the South posted a score of 50.5 and the West region’s score was 48.6.
Architecture project pipelines appear to remain full. Product inquiries posted an index score of 56.7 and new contract signings had a 52.7 score.