Architecture Billings Index Hits Record Low, as CRE Bust Enters View

Business conditions at architecture firms continue to deteriorate, with the Architecture Billings Index posting its lowest level since the survey began in 1995 for the second month in a row, according to a statement yesterday by the American Institute of Architects. As a leading economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending. The AIA said its Nov. rating fell to an all-time low of 34.7, down from the 36.2 mark in October; the indicator for new project inquiries also fell to 38.3, a historic low point, the group said. Any score above 50 indicates an increase in billings and/or inquiries. “With mounting job losses, declines in retail sales, and travel cut-backs the need for new commercial facilities has dropped considerably recently,” said AIA chief economist Kermit Baker, in a statement. “What’s just as troubling is that the institutional sector –schools, hospitals and public buildings — is also beginning to react to tighter credit conditions and a weakening economy.” Regionally, the Midwest fared the worst in the ABI, logging 31.4 last month, while the Northeast logged a regional-best at 39.5. By sector, the worst-performing area during November was commericial & industrial at 26.7; the sector has consistently been the worst performer as the ABI index has headed south throughout most of 2008. A report released last month by Environmental Data Resources Inc. that found a 17 percent annual decline in the number of environmental site assessments conducted across the U.S. in the third quarter; environmental site assessments are a critical indicator of commercial building activity. Write to Paul Jackson at

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