Demand for design services from U.S. architecture firms took a pointed dip last month, according to a new report from the American Institute of Architects (AIA). The pace of decline during December accelerated from November, posting an Architecture Billings Index (ABI) score of 42.6 from 46.3 (any score below 50 indicates a decline in firm billings).

Meanwhile, the pace of growth of inquiries into new projects remained flat from November to December with a score of 52.4, though the value of new design contracts stayed in negative territory with a score of 48.5.

“Since the national economic recovery appears to have stalled, architecture firms are entering 2021 facing a continued sluggish design market,” says AIA chief economist Kermit Baker. “However, the recently passed federal stimulus funding should help shore up the economy in the short-term, and hopefully by later this year there should be relief as COVID vaccinations become more widespread. Recent project inquiries from prospective and former clients have been positive, suggesting that new work may begin picking up as we move into the spring and summer months.”

Key ABI highlights for December include:

  • Regional averages: South (46.8); Midwest (43.6); West (43.4); Northeast (38.8)
  • Sector index breakdown: mixed practice (48.0); commercial/industrial (47.2); multi-family residential (46.1); institutional (38.5)
  • Project inquiries index: 52.4
  • Design contracts index: 48.5

AIA also recently released a new consensus forecast, in which it states that slowing demand at architecture firms last year is expected to contribute to a projected 5.7% decline in construction spending for 2021.

The AIA Consensus Construction Forecast Panel expects steep declines this year in construction spending on office buildings, hotels and amusement and recreation centers. Healthcare and public safety are the only major sectors that are slated to produce gains in 2021.

Growth in nonresidential construction is expected for 2022, with 3% gains projected for the overall building market matched by both the commercial and institutional sectors.

“The December jobs report confirmed that the economy needs additional support in order to move to a sustainable economic expansion,” says Baker. “As pandemic concerns begin to wane and economic activity begins to pick up later in 2021, there is likely to be considerable pent-up demand for nonresidential space, leading to anticipated growth in construction spending in 2022.”

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