ABI Shows Demand for Design Services Continues to Escalate Rapidly

The American Institute of Architects (AIA) reported that the latest Architecture Billings Index (ABI) logged its second positive mark since the beginning of the pandemic and a score not seen since before the Great Recession. The ABI score for March rose to 55.6 compared to 53.3 in February (any score above 50 indicates an increase in billings). Scores for both new projects inquiries and new design contracts strengthened to 66.9 and 55.7, respectively. March also marked the first time in three years all building sectors and regions posted positive scores.

Dodge Momentum Index Continues to Increase

The Dodge Momentum Index moved 1.7% higher in March to 151.4 (the year 2000 = 100) from the revised February reading of 148.8. According to the March data, the Index hit its highest level since the summer of 2018 due to an increase in institutional projects that entered the planning stage, which came on the heels of a similar gain for the sector in February.

Overall, the Momentum Index for March 2021 was up 11% versus March 2020. While healthcare and lab projects continue to dominate institutional planning, March saw a more broad-based selection of project types, including education and recreation buildings. Institutional building construction rose 14.0% from February, while year-over-year comparisons showed a 10% increase for the sector. However, commercial construction dipped 3.9% for the month due to a slight pullback in warehouse activity that other commercial projects could not make up for, though the sector showed a 12% increase from March 2020 in year-over-year comparisons.

Construction Starts Increase in March; Rising Material Prices Could Hamper Recovery

Total construction starts rose 2% in March to a seasonally adjusted annual rate of $825.3 billion, according to Dodge Data & Analytics. A solid increase in nonresidential building starts fueled the March gain, while growth in residential starts was small and nonbuilding starts fell. The Dodge Index rose 2% in March, to 175 (2000=100) from February’s 172.

Nonresidential building starts rose 13% in March to a seasonally adjusted annual rate of $235.3 billion. Institutional building starts rose 15% during the month fueled by gains in education, recreation, and public buildings. Commercial building starts increased 11% thanks to healthy gains across all commercial sectors. Manufacturing starts lost 52% in March after strong levels during the previous two months.

For the 12 months ending March 2021, nonresidential building starts dropped 28% compared to the 12 months ending March 2020. Commercial starts declined 30%, institutional starts were down 20%, and manufacturing starts slid 56% in the 12 months ending March 2021.

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