Design billings finish year strong

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Architecture firms across the country report increasing demand for design services, and Minnesota appears to reflect the national trend.

The American Institute of Architects’ Architecture Billings Index, a predictor of future U.S. nonresidential construction activity, had a reading of 52.5 in December, AIA said this week. Any reading over 50 indicates an increase in billings.

That comes on the heels of positive scores in November (51.9) and October (52.0). Previously in 2019, a string of negative monthly readings prompted worries that the national market was headed for a slowdown.

In December, three of the four U.S. regions covered in the AIA billings survey scored higher than 50. The West set the pace with 54.0, followed by the South (52.2), Midwest (51.9) and Northeast (44.0).

“Despite the ongoing slowdown in billings in the Northeast, balanced growth across sectors and regions looks more positive for the coming year,” AIA Chief Economist Kermit Baker said in a statement.

“Factors outside of the construction sector, such as trade policy and international events, could still impact demand for design services. However, recent fears about a downturn in construction activity have largely subsided.”

In the December survey, the highest-scoring sector was commercial/industrial, which had an index of 54.0. Next were multifamily residential (51.0), mixed practice (50.8) and institutional (50.8).

Vaughn Dierks, a partner at St. Paul-based Wold Architects and Engineers, said demand for architectural services remains vigorous in the Twin Cities. Wold is a prolific designer of schools and other public sector buildings.

“We are definitely seeing an increase in the number of projects we are doing. … That indicates a stronger economy when you have school districts, government and health care clients all looking to make facility investments in one form or another,” Dierks said.

“As long as the economy stays strong, I think there is optimism that construction across the board will continue.”

Minnesota architects are seeing a “healthy mix of commercial, residential and mixed-use” activity, said Karen Lu, 2020 president of AIA’s Minnesota Chapter and a senior associate with Snow Kreilich Architects in Minneapolis. Lu believes those trends will continue in 2020.

Ed Kodet, founder of Kodet Architectural Group in Minneapolis, said local firms are upbeat and are hopeful about future public works investments with help from a generous bonding bill in the 2020 legislative session.

Architects are seeing strong or steady work in sectors such as housing, medical, office and education, he said. In November, voters in Minnesota school districts approved $1.3 billion worth of projects. More school bond referendums are coming up this spring and fall.

“Our office has been busy. Backlog has been increasing and that is always a good sign,” Kodet said. “I think by and large firms are upbeat and everyone seems to be busy. Interest rates seem to be steady and so I think everyone feels pretty good about things.”

AIA’s Architecture Billings Index forecasts nonresidential construction activity nine to 12 months into the future. The index is based on a survey of design firms throughout the country.