ABI ticks down

Posted by Expert Gadget Reviewer on Friday, 25 June 2010

The Architectural Billing Index (ABI) ticked down three points after nearly three straight months of improvement. The American Institute of Architects (AIA) reported the May ABI at 45.8, down three points from the 48.4 reading from April. The ABI is a recognized leading economic indicator of construction activity.

The change in direction is a surprise, as it appeared that conditions were consistently improving. AIA Chief Economist Kermit Baker provided some insight, "The overriding issue affecting the entire real estate sector is unusual caution on the part of lending institutions to provide credit for construction projects that apparently would be successful in this economic environment.”

The regional averages showed continued weakness in the South and West (anything over 50 is expanding, anything below 50 is contracting):
  • Northeast (50.6)
  • Midwest (48.5)
  • South (45.9)
  • West (42.9)
On the micro-economic level, we have seen a pretty sharp increase in activity at all client sizes, over the past 4 weeks. A local commercial broker I spoke with today indicated he thought the increase could  be due to the falling rents finally enticing tenants to venture into the market.