Architects getting more contracts
After more than a year of meager activity, the nation’s architects reported a growing number of new contracts in October from builders preparing to get real estate developments off the ground.
It was the highest level of new business for the nation’s architects since August 2008, a report from the American Institute of Architects says.
“This news could prove to be an early signal toward a recovery for the design and construction industry,” said Kermit Baker, the AIA’s chief economist.
The architects’ survey is a leading indicator of construction activity because there is a nine- to 12-month lead between when they start work on designs and when builders actually break ground.
The AIA, the leading trade group for the profession, said in a report scheduled to be released today that its index of “work on the boards” reported by architects was up sharply in September but new commissions still remained far below mid-decade highs.
“The industry is nearing a bottom and might start pulling out in the next quarter or so,” Baker said. “We are months away from a substantial upturn in construction activity, but this is the first sign in place for that to turn around.”
Not everyone was upbeat. Pasadena architect Richard Keating was skeptical of the AIA’s report of improved billings. “We haven’t seen anything that would substantiate that, not here in Southern California,” said the design partner at Keating Khang Architecture.
Architectural billings are considered a meaningful indicator of future development activity because builders are loath to spend money on design unless they are sure their projects are going to go forward, the AIA’s Baker said.
The bulk of new designs were for institutional developments such as schools, government buildings and healthcare facilities. “That’s one sector that has benefited from federal stimulus money,” he said.
The next-largest category was designs for multifamily residential developments such as apartment buildings, followed more distantly by plans for commercial properties.
Persuading developers to pull the trigger and begin new projects still isn’t easy, said Los Angeles architect Douglas Hanson, who designs large-scale commercial projects at DeStefano & Partners.
“In previous times people would rush to get started in a week or two, but now it takes months to get people to commit resources and money,” Hanson said. “It takes three, four, five or six meetings to convince them.”
Baker said the increasing activity in real estate billings was a noteworthy improvement but he cautioned people not to think the slow times were over.
“We continue to get reports of architecture firms struggling in a competitive marketplace with a continued decline in commercial property values,” he said. “It is far too early to think we are out of the woods.”
The view from Sacramento
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