As nationwide data on multi-family residential continues to roll in, there’s no mistaking it – we’re in a slump.
While the Salt Lake market continues to hold its own nationally for new multi-family permits issued over the last year, architects’ business conditions–leading indicators of development activity–continue to soften.
Let’s take a look at some national figures for multi-family residential activity as well as the latest survey of architects from their national organization, the American Institute of Architects (AIA).
Architects’ billings continue to fall
Every month, the AIA/Deltek survey asks architecture firms whether they have billed less or more than the previous month, with 50 being even. The billing index, which measures the all-important metric of income to design firms nationwide, continued its downward trend for August.
Not only are billings down, with a score of 47.2, inquiries have also stalled out, after slight increases over the previous three months.
Adding to the dour weather, the value of new contracts is also shrinking. As the AIA/Deltek survey notes, “the value of new design contracts declined for the 18th consecutive month, the longest period of decline since we started collecting this data 15 years ago.”
As one local architect put it to us recently, “I don’t understand how billings can continue to decline for this long, but…”
The AIA report summarizes its impressions thus: “This year has seen generally soft inquiries into new projects and a steady decrease in the value of newly signed design contracts, as clients remain cautious about committing to new projects.”
Regionally, how are we doing?
Business for architects is down nationwide, with the South region experiencing the best performance – essentially flat conditions for the fourth consecutive month, architects reported to AIA.
Out West, firms said their billings were down again this month, as “they reported their weakest conditions in nearly two years,” says the report.
In fact, Western design outfits are currently reporting dismal business conditions, the worst in the nation according to the AIA/Deltek survey..
Yet permitting numbers show some sustained muscle in the Salt Lake – Ogden – Brigham City market area, according to RealPage data..
Ranked 27th nationally in the aggregate number of new multi-family permits issued Y-O-Y starting in August, the northern Wasatch Front is no slouch.
By sector: what’s hot and not?
Right now, nothing’s hot. But commercial/industrial development, reflecting strong retail and warehouse leasing numbers in many markets, “reported modest growth in August for the first time in three years,” the report notes.
Multi-family architecture design demand, as well, has sent enough fish down the river to count an uptick in the last few months while flattening out in August.
Architectural firms that specialize in the Institutional submarket are currently out to sea, seeing, as the report puts it, “their lowest levels since 2020. Uncertainty with government budgets in recent months continues to cause uncertainty for many firms specializing in institutional facilities.”
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