Architects reported a broad slowdown in business in November with the drop in demand suggesting that developers and investors want more clarity on the economy before pursuing projects.
The total value of invoices, as measured by the American Institute of Architects’ monthly billings index, dropped to 46.6 from 47.7 in October. A score below 50 indicates that billings declined. In addition, newly signed contracts and new inquiries also fell in November.
The downward trend may reflect the decline in deal-making in commercial real estate as rising interest rates and inflation have chilled many projects and financial deals.
Despite the warning signs, architects are optimistic about 2023, Kermit Baker, chief economist at the AIA, said in a news release.
“Many architecture firms will rely on their near record levels of backlogs to support revenue,” Baker said. “Almost two-thirds of architecture firms project that 2023 will be either a good year or great year.”
Architects’ optimism echoes a report this week from the construction industry trade group American Builders and Contractors that builders continue to win new contracts.
In the AIA's November report, the U.S. Southeast posted the best performance in architecture billings with a score of 50.5, indicating growth in billings. But the Midwest, West and Northeast all reported a slowdown in billings.
The AIA monthly index does not provide a breakout of billings or revenue by individual firms.
One of the largest recent architecture assignments was a $92.5 million contract awarded to Dallas-based Jacobs from NASA for a field laboratory in California. The boom in new lithium-ion battery factories will also produce new architecture contracts. SSOE Group was recently selected as architect for Ascend Elements’ planned battery facility in Hopkinsville, Kentucky.
In another project, several firms are vying for a contract to expand the Portland Museum of Art in Portland, Maine, with an announcement expected this month. The shortlisted firms are Adjaye Associates, Lever Architecture, MVRDV, and a joint venture between Toshiko Mori, Johnston Marklee and Preston Scott Cohen.