The latest Architecture Billings Index (ABI) report published by the American Institute of Architects (AIA) shows that business for the architecture industry has taken a precipitous drop in the weeks since the COVID-19 crisis began to take hold in the United States. 

While February’s ABI numbers showed a positive trajectory and a preliminary March report hinted at the growing severity of the nation’s economic collapse, March’s official tally, which still only really captures the first few weeks of the crisis, shows a drastic contraction in the demand for architectural services. 

The index is scored between 0 and 100, with a score of 50 registering no change in demand for architectural services; Anything above 50 indicates a growth in billings while and anything below shows a drop in demand for design services. 

March ABI highlights

• Architecture Billings Index score for March: 33.3
• Project inquiries index: 23.8
• Design contracts index: 27.1

In March, the ABI registered a score of 33.3, dropping below 50 for the first time in half a year. The depressed economic outlook is due to a collapse in the demand for design services as the economic shut down put into place to limit the spread of the virus began to take effect. 

For March, new project inquiries fell to 23.8 while design contract executions fell to 27.1, the drops, according to the AIA, reflect  the “largest monthly decline in billings” the group has seen.  

In a memo posted to the AIA website, AIA Chief Economist Kermit Baker, Hon. AIA, PhD writes, “Though most architecture firms have made quick transitions to remote operations, the complete shutdown of business activity is severely impacting architects,” adding, “The dramatic pullback in new and ongoing design projects reflects just how quickly and fundamentally business conditions have changed across the country and around the world in the last month as a result of the COVID-19 pandemic.”

COVID-19 crisis impacts all regions 

• Regional average, West 45.3
• Regional average, South 44.2
• Regional average, Midwest 44.2
• Regional average, Northeast 38.4

When broken down by regional and building sectors, the numbers are hardly better. 

As has consistently been the case over the last year, the Northeast sector of the country saw the lowest level of demand for design services. The three remaining sectors—Midwest, South, and West—all showed a drop in demand, as well, with the West fairing the best out of the three, but only slightly. 

Part of the contraction in the Northeast could be due to the strict construction stoppages that have been put in place in the region’s major metros, including New York City, Boston, and Philadelphia. Across the rest of the country, a hodgepodge of restrictions and exceptions have allowed a significant amount of construction work to proceed, though at a slower pace than usual. 

All building sectors shrink

• Institutional: 46.9
• Multi-family residential: 43.3
• Commercial/industrial 41.9
• Mixed practice 40.6

As the building sector and design inquiries numbers show, slowing work on the construction side of the design process has been matched with a drop in overall design work, as well. 

As the economic shut down has taken shape and many workers have been sent home, demand for commercial and mixed practice work fell by the most. Residential work, some of which has been allowed to continue on the construction side, fell steeply as well, but be less than other sectors. Institutional work, which includes hospital buildings and other critical projects, showed only a relatively modest drop in activity. 

Firms are pessimistic about the future

In addition to the monthly ABI figures, the March report included a survey investigating how architecture firms feel about the coming year’s economic trajectory. As one might expect, the findings were not good. 

66% of firms surveyed expect that “revenue will be considerably lower than it is at present” this year, while 17% indicate that their firms will shrink “considerably.” In response to the crisis, 76% of firms indicated that they have “trimmed all unnecessary expenses” while 59% have made changed to ensure their firms “will be operating more efficiently,” including, as 39% of firms indicate, investments in new information technologies.

Simultaneously, however, 14% indicated that they are now “offering a broader set of design and/or construction services” in the aftermath of the crisis. While only 6% have indicated the opposite. 1% of respondents have merged or been acquired by another firm.