ABI Rises for Fifth Consecutive Month

Modest Revenue Increases Continue Through Spring
More than half of architecture firms surveyed plan to add architecture positions in 2012 
From AIArchitect 


By Jennifer Riskus

Architecture firms reported modest growth in revenue for the fifth consecutive month in March, with an Architecture Billings Index (ABI) score of 50.4 (Any score over 50 indicates increasing firm billings). Business conditions continue to improve at firms in all regions of the country, with the exception of those in the West, where the downturn remains well entrenched.

In addition, firms with a residential specialization, as well as those with a commercial/industrial specialization, both reported increasing revenue for the seventh month in a row. Firms with a commercial/industrial specialization have reported growth in 16 out of the last 21 months, a positive sign that the expansion is well established in that sector. However, business conditions remain weak for firms with an institutional specialization, despite two months of minimal growth in late 2011 and early 2012.

Economy rising, employment still lagging

In another positive sign, more work appears to be on the horizon. Architecture firms have reported growth in the value of new design/design-build contracts for the last three months. Although this measure is not seasonally adjusted, and may be partially due to the impact of a warmer-than-average winter across much of the country, it should still be taken as an encouraging sign. The AIA’s quarterly measurements of firm backlogs reveal an average length of 4.6 months, the highest they have been since September 2008.
The general economy continued to broadcast positive signals as well, with the latest issue of the Federal Reserve’s Beige Book showing that the economy grew at a moderate pace in March, despite some concern about the impact of rising gas prices. Residential real estate activity improved in all districts of the country, with the exception of the Cleveland and San Francisco districts. Multifamily housing unit construction increased across the board. In addition, nonresidential construction activity increased in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis districts, and healthcare construction expanded in the Cleveland and Chicago districts.

However, employment data from the Bureau of Labor Statistics was more sobering, with non-farm payroll employment adding just 120,000 new jobs in March, half the number that had been added in each of the three prior months. One factor leading to lower numbers was a sharp decline in retail employment. Construction employment was essentially flat for the month, adding just 7,000 jobs, but the architectural services sector grew to 153,200 in February (the most recent data available) with the addition of 1,200 jobs from January. However, since this data is not seasonally adjusted, that growth may be partially due to seasonal hiring for the spring.

Looking ahead to hiring 


This month panelists were asked about anticipated salary and staffing changes for 2012. Despite the fact that nearly half of the respondents, on average, expect salaries in 2012 to be unchanged from 2011, more firms anticipate increases in salaries than expect to see salary decreases for all types of architecture positions. Nearly half of firms (48 percent) anticipate that guaranteed compensation for interns on the path to licensure will increase in 2012, compared to just 12 percent who expect it to decline. Slightly fewer respondents (38 percent) report that compensation will increase for firm principals and partners, compared to nearly half that amount (20 percent) forecasting a decrease. However, more than four in 10 firms predict that salaries will rise for both licensed architects (46 percent) and nonregistered design professionals (44 percent), in contrast to the 15 percent and 13 percent, respectively, that anticipate declining salaries.

In addition, more than half of architecture firms (51 percent) plan to add positions at their firm this year, with interns and moderately experienced architects/designers (those with four to six years’ experience) being the most popular planned additions, followed by architects/designers with seven to 10 years’ experience. Students/part-time staff and managers/senior managers are the third and fourth (respectively) most popular new staff to add. Many firms that laid off their youngest staffers during the downturn have now become top-heavy, necessitating the addition of more young architects and other emerging professionals as they recover from the struggling economy. Just over 80 percent of survey panelists indicated that they do not plan to reduce staff at their firm this year, but those that do anticipate reductions are more likely to eliminate employees with the most experience: 40 percent anticipate reductions in experienced architect/designer positions.

Reference:
The ABI Work-on-the-Boards panel is open to any AIA member who is principal/partner of their firm. Apply to join the ABI panel by completing a brief background information form on your firm here.

About the AIA Architecture Billings Index

The Architecture Billings Index (ABI), produced by the AIA Economics and Market Research Group, is a leading economic indicator that provides an approximately nine- to 12-month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member–owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended, as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered near 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the white paper “Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship between a Billings Index and Construction Spending” on AIA.org.

San Dieguito River Park Administration Headquarters Tour

For more information & To RSVP

Visit: http://aiapalomar.mymemberlink.com

Now Accepting Vendor Registrations | Sixth Annual AIA Palomar Insdustry Mixer

For More Information & To Sign Up 

Visit: http://aiapalomar.mymemberlink.com

Spring 2012 Issue of California Architects

The spring 2012 issue of California Architects, the official newsletter of the California Architects Board, is now available online. To View the newsletter visit http://www.cab.ca.gov/pdf/newsletters/spring12_nl.pdf or click the image.

NCARB Launches 2012 Practice Analysis of Architecture Survey

2 April 2012

Washington, DC—This week, the 2012 NCARB Practice Analysis of Architecture Survey is being e-mailed to thousands of architects, interns, and educators across the country. Surveying the profession to identify the tasks and knowledge/skills necessary for the independent practice of architecture will provide essential insight into current and future trends.

“By contributing their expertise and assessment of what’s happening in offices, studios, and classrooms, survey participants can help us better understand the ever-evolving practice of architecture,” said NCARB CEO Michael J. Armstrong. Survey findings will be significant to the profession and will help: drive the Architect Registration Examination® (ARE®), inform the Intern Development Program (IDP), and guide NCARB’s contribution to the National Architectural Accrediting Board (NAAB) 2013 Accreditation Review Conference (ARC). The results will also be used to inform the Council’s continuing education policies.

The survey will take about an hour to complete; however, participants will benefit from the ability to complete it in multiple short sessions, enhanced navigation and graphics, and the use of new techniques such as “matrix sampling.” Matrix sampling tailors the number and focus of questions delivered to each survey participant, thereby reducing the amount of time to complete the survey, while still providing coverage of a broad range of content areas.

The 2012 survey was developed through the collaborative effort of NCARB and its collateral organizations: the American Institute of Architects (AIA), the American Institute of Architecture Students (AIAS), the Association of Collegiate Schools of Architecture (ACSA), and the NAAB. With the expert guidance of consultant PSI Services LLC, the Practice Analysis Steering Committee (PASC), comprised of volunteer architects and representatives from each collateral organization plus NCARB staff, spent nearly two years carefully conceiving and designing a survey that will: maximize potential results, provide valuable insights into the profession, and lay the strongest foundation for education, experience, examination, and continuing education.

NCARB strongly encourages those who receive the electronic survey to respond—the greater the number of respondents, the more reliable and informative the data. Participating in the Practice Analysis survey is an important way to give back to the profession and influence its future.

Upon completing the survey, respondents will be eligible to enter a drawing for a $50 Visa Rewards gift card.
NCARB will give away 100 cards in total, drawing 25 names each week, during the four weeks the survey is open.

The survey is also accessible at www.ncarb.org. The deadline for completing the survey is 30 April 2012. For more details, visit: www.ncarb.org/2012PA.

For more information contact:
Kim Kerker
Director, Communications
202/783-6500
kkerker@ncarb.org

Another Month of Revenue Growth at Architecture Firms

Despite downturn, green projects are expected to increase in number in the years ahead
By Kermit Baker, Hon. AIA
AIA Chief Economist
Billings at U.S. architecture firms increased again in February, marking the fourth straight month that revenue has risen. With a rating of 51.0, though, the February score was only a slight increase over January levels, so there is yet to be a strong rise in activity in the design professions. Inquiries for new projects saw another month of strong growth, with February now the fourth straight month that the score for inquiries has been above 60, an indication that architecture firms are hearing of more and more potential projects.

Rising employment rates buoy firm billings
Revenue gains have been paced by strong growth at firms in the Midwest and modest growth at firms in the Northeast and South. All three regions are showing momentum that should produce healthy recoveries in design activity over the next few months. Firms in the West, by contrast, are still reporting declining levels of billings. However, a continued upturn in design activity in the rest of the country should begin to pull up billings at firms in this region over the next several months.

By sector, the strongest billings scores are from firms specializing in the commercial/industrial sector, where readings have been at very healthy levels for the past few months. Billings at residential firms have also steadily turned up. An encouraging recent development is that firms focusing on institutional facilities have also reported modest gains over the past three months. Typically, institutional facilities are usually the last nonresidential building sector to recover from a downturn.

The upturn in billings at architecture firms is supported by general strength in the economy. In particular, the employment situation has improved considerably. The last three months have seen national payroll increases of at least 200,000 per month. (How much of this was the result of much milder weather conditions than usual in the Northeast and Midwest remains to be seen.) Still, the economy added more than 1.8 million new payroll jobs in 2011, and the first two months of 2012 have seen another 500,000 added. As a result, the national unemployment rate has fallen to 8.3 percent, the lowest level since early 2009.

Employment in the construction sector has not fared as well. While this sector has generally been adding jobs, there has been much more volatility. In 2011, 69,000 construction sector jobs were added—just over 1 percent of the 5.5 million payroll positions currently in the construction sector. The decline of 13,000 positions in February wiped out most of the January gains, so only 8,000 jobs have been added so far in 2012.
There has been a solid upturn in home-building activity over the past three months indicating stronger growth, assuming these gains are not solely related to the milder-than-usual weather. The economy generated about 600,000 housing starts a year for the past two years, but since last November this rate has increased to an average of almost 700,000 starts per month at an annualized rate. The overall upturn in economic activity pushed up GDP growth by 3.0 percent at an annualized rate in the fourth quarter of last year, after averaging only 1.2 percent growth in the first three quarters of last year.

The future of green
Even with the significant downturn in project activity over the past few years, almost a quarter of firms (24 percent) report that the share of green projects certified by a green rating system at their firm had increased since the construction downturn began. Fewer than one in five (19 percent) felt that the amount of green projects had decreased, while the remaining 57 percent felt that it had remained about the same. Institutional as well as residential firms were much more likely than commercial/industrial firms to report that the green share had increased over the past few years.

Moving forward, the overwhelming majority of firms feel that they will do more and more green projects over the next few years. Overall, almost two-thirds of firms feel that the share of projects that are green will increase either a little or a lot, while fewer than one in 10 feel that the green share will decrease.
Regionally, a higher share of firms in the South feels that their green share of projects will increase over the next few years. More than 70 percent of firms in this region expect the amount of green projects to increase, while fewer than 4 percent expect it to decline. In contrast, 54 percent of firms in the Northeast expect this share to increase, while 12 percent expect it to decline.

By building type, firms concentrating on the institutional sector expect the greatest gains in green projects at their firm, with 70 percent expecting gains and approximately 4 percent expecting declines. By contrast, just over half (51 percent) of commercial/industrial firms expect increases at their firms, while almost 14 percent expect declines in green projects.

This month, Work-on-the-Boards participants are saying:

• There seems to be a lot more solid leads. Availability of financing is still the primary limiting factor, although it seems like some of our clients are working through that. —15-person firm in the Midwest, commercial/industrial specialization • We’re seeing a pickup because of the Eagle Ford Shale [natural gas extraction area] in South Texas. There is also a housing shortage for oilfield workers in the rural towns nearby. —16-person firm in the South, institutional specialization • There are new projects beginning, but competition is heavy. Some firms are proposing very low fees. We have also seen continued problems with obtaining financing. —3-person firm in the South, residential specialization 

• We have been trying to hire, and find it surprisingly difficult to find candidates. This is a good sign. —15-person firm in the Northeast, commercial/industrial specialization