Following two months of overall decline, an index measuring architect billings which serves as a leading indicator of future construction spending in areas related to office space in Philly rose in May, according to the American Institute of Architects (AIA).
An increasing demand for construction of Philadelphia office space, schools, hospitals, cultural facilities and municipal buildings – a market that includes Philadelphia commercial properties and Philadelphia commercial real estate – helped nudge the Architecture Billings Index (ABI) back to 51.9 last month, up from April’s contracting growth number of 48.8.
After hot starts, two sectors reflecting future commercial real estate construction spending – such as that underway involving office space in Philadelphia – cooled off during April, with commercial/industrial and multifamily residential projects logging declines of 48.3 and 45.9, respectively. Index numbers above 50 indicate an increase in billings.
The recent volatility in the index reflects the long and halting recovery for construction and architect services despite a generally favorable business climate, says AIA Chief Economist Kermit Baker.
“We continue to receive mixed signals on business conditions in the marketplace,” Baker said. “There are still construction sectors and regions of the country that are struggling, producing the occasional backslide in the midst of what seems to be growing momentum for the entire industry,” noting that many industry sectors are experiencing something of a building boom, akin to what is happening with Philadelphia commercial real estate listings.
In addition to Philly office space, apartment projects continue to break ground across a large number of markets but appear to be leveling off after a torrid pace of construction even as office and multifamily high-rise projects in Manhattan and San Francisco are reaching post-recession highs.
Construction at the Hudson Yards redevelopment is kicking into high gear in New York, while in Washington, D.C., the 66-acre redevelopment of the Walter Reed Army Medical Center is now expected to break ground before the end of next year.
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