Design activity in West falls for 12 straight months

The Western region of the United States has now seen demand for design services decrease for an entire year, according to the latest Architecture Billings Index released Wednesday.

The American Institute of Architects’ Architecture Billings Index reported a score of 44.3 in June for the West, down from May’s mark of 47.3.

Any score below 50 indicates demand for architectural services is declining.

A. Lewis Dominy III, founder and principal at Domusstudio Architecture, said he was a bit shocked to hear the West had dipped so low.

“Wow,” he said. “This is not encouraging news.”

Dominy said he thinks developers and investors are waiting for the November election results before deciding whether to go forth with their projects and hire architects.

For 12 consecutive months, the Billings Index has not seen design activity increase. The last time the West had a score above 50 was in June 2011, with a mark of 51.7.

In 2011, there were only two months where design services were in demand: March and June.

Furthermore, since January 2009, these two instances were the only time when architectural services were in demand.

When asked to gauge the San Diego architectural market, Dominy said it is "mixed" because some firms are doing relatively well, like his, and some are cutting staff.

“Ironically, one of my colleagues is busy designing custom homes,” Dominy said. “But another architect is laying off. He was designing commercial projects.”

All other regions in the United States also saw design activity fall last month.

The Midwest posted a score of 48.0; followed by the South at 47.6; and the Northeast with a mark of 46.4.

This is the second consecutive month that all four regions had a score below 50, after eight months where the Billings Index had at least one area where architectural demand was rising.

Nationally, the Architecture Billings Index reported a score of 45.9 in June, a tick above the mark of 45.8 in May.

This is now the third month in a row in which demand in design services is falling, after five months of increased design activity from November 2011 to March 2012.

Kermit Baker, chief economist for the American Institute of Architects, said national firms are starting to feel what Dominy is seeing in San Diego.

“While not all firms are experiencing negative conditions, a large share is still coping with a sluggish and erratic marketplace,” Baker said. “The downturn in design activity that began in April and accelerated in May has continued into June, likely extending the weak market conditions we’ve seen in nonresidential building activity.”

Additionally, none of the four sectors the Billings Index tracks had demand for design services.

The multi-family residential had a score of 49.0; followed by commercial and industrial at 46.9; institutional with 46.0; and mixed-use at a mark of 45.9.

The Billings Index has an approximate nine- to 12-month lag time between demand for payment by architectural firms and construction spending.

The data is based on monthly “work-on-the-boards” surveys that are sent to a panel of AIA member-owned firms.

Participants are asked whether their billings increased, decreased or stayed the same in the month that just ended, as compared to the prior month.