By Peter Ricci
The Architecture Billings Index, a leading measure of growth in the commercial and multifamily sectors of real estate, grew at its fastest pace since 2010, rising from 50.2 in August to 51.6 in September.
A measure of billing activity at the nation’s architectural firms, the Architecture Billings Index has been rising steadily throughout 2012, with the surging multifamily market leading the charge. Any measure more than 50 indicates an increased demand for architectural services.
Architect’s Services in Increasing Demand
In addition to the index-wide increases, the new projects inquiry index nudged higher to 57.3. More specifically, here’s how the index broke down:
- Regionally, the West is seeing the most demand for architects with an index of 53.4, followed by the South at 51.9, the Northeast at 49.5 and the Midwest at 47.2.
- On a sector by sector basis, multifamily housing once again came out on top with an index of 57.3, followed by institutional at 51.0, commercial/industrial at 48.4 and mixed practice at 47.8.
Architecture Billings Index – It’s a Multifamily Affair
Kermit Baker, the AIA’s chief economist, said the multifamily residential sector has been the Architecture Billings Index’s best performing market for more than a year now.
“Going back to the third quarter of 2011, the multifamily residential sector has been the best performing segment of the construction field,” Baker said. “With high foreclosure levels in recent years, more stringent mortgage approvals and fewer people in the market to buy homes there has been a surge in demand for rental housing.”
And indeed, the ascent of the multifamily housing industry the past year has been one of the more recurring stories on our site. The NAHB’s multifamily production index recently hit its highest mark since 2005 and recent estimations by the Mortgage Bankers Association state that 4.8 million renters entered the marketplace in the last six years.
Though recent studies have predicted a subsiding of the apartment boom in the next couple years, changes in American demographics and housing preferences suggest that multifamily housing is here to stay – and, considering the developments represented by the Architecture Billings Index typically break ground in nine to 12 months, it’s looking like we can anticipate only more multifamily developments.