Increased design billings could signal recovery

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Billings by U.S. architects rose in September for the first time in almost three years, Bloomberg reported.

The Architecture Billings Index increased 2.2 points to 50.4 in September, marking the first gain in fees since early 2008. Any reading above 50 indicates an increase in billings.

The data, which suggests that demand for architects’ services are on the rise, is good news for the commercial real estate market.

“We’re moving in the right direction,” said Kermit Baker, chief economist with the American Institute of Architects (AIA) in Washington, D.C. “It certainly looks like a sustainable recovery on the commercial and industrial side.”

In January 2008, the index was at 51.1. In January 2009, at 33.9, the benchmark was its lowest since at least 1995 when the AIA began tracking the data.

About 40 percent of the index reflects billings for office buildings, retail centers, hotels, warehouses, manufacturing plants and other commercial properties.

Baker told Reuters that the upturn in design activity may indicate that a sustainable recovery is under way. “But we will need to see consistent improvement over the next few months in order to feel comfortable about the state of the design and construction industry,” he said.

The AIA said commercial construction spending generally lags behind design work by nine to 12 months.

Housing starts in the United States also rose in September, according to the U.S. Department of Commerce, which is another sign that a recovery in construction spending might be under way.