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Architecture Billings Index sinks again in June

Post Time:Jul 20,2011Classify:Industry NewsView:77

The American Institute of Architects reported the June Architecture Billings Index score was 46.3, almost a full point off the 47.2 score it posted in May, reflecting a continued decrease in demand for design services, according to a July 20 AIA release. On the bright side, the new projects inquiry index was 58.1, up sharply from a mark of 52.6 in May.

"This seems to be a case of not thinking it can get any worse – and then it does," said AIA Chief Economist Kermit Baker, in the release. "While a modest turnaround appeared to be on the way earlier in the year, the overall concern about both domestic and global economies is seeping into design and construction industry and adding yet another element that is preventing recovery. Furthermore, the threat of the federal government failing to resolve the debt ceiling issue is leading to higher borrowing rates for real estate projects and should there actually be a default, we are likely looking at a catastrophic situation for a sector that accounts for more than ten percent of overall GDP."

AIA is launching a database of stalled building projects throughout the country, in an effort to revive development. The AIA will analyze stalled projects that suffer from lack of financing, and identify opportunities to collaborate and finance the project. It may seek funding from alternative sources, such as pension funds or construction groups, rather than banks, some of which are reluctant to invest in real estate, said Baker in an Architectural Record report.

According to Architectural Record, the results of the study are expected to be released in a few months.

Read the full release

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