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AIA Reveals Architects Report Stalled Projects

Jun 13, 2011 4:59 PM

Almost two-thirds of architects surveyed by the American Institute of Architects (AIA), New York, report that they have at least one project that is stalled due to lack of financing, despite record low interest rates. The survey of April business activity was taken as part of the AIA’s Architectural Billings Index (ABI), a leading monthly economic indicator of construction activity that provides a nine- to 12-month glimpse into the future of nonresidential construction spending activity. Of the 63% of firms surveyed with stalled projects, the average value of each project was almost $50 million per firm.

Among the survey’s major findings:

• The availability of construction project financing remains a major issue for many architecture firms. In April, 57% of survey respondents rated the issue as very or extremely serious, and an additional 30% indicated that it is a somewhat serious issue.
• Nearly half of respondents (45%) think that the availability of credit has become more restrictive over the past year, with just 16% seeing an easement in credit availability.

“This data only serves to reinforce the dire need for lawmakers to act to alleviate a credit crunch that continues to plague one of the economy’s biggest job-creating engines — the design and construction industry,” says AIA President Clark Manus, FAIA. “We are on the front lines of an industry that accounts for $1 in $9 of U.S. Gross Domestic Product, according to the U.S. Census Bureau.

“Congress can clearly move to free up credit by passing legislation that gives the regional banking industry more freedom to lend. What’s needed on Capitol Hill is action to ensure that as Congress cuts federal spending, it also takes steps to make credit more available.”

An example of such legislation is the Capital Access for Main Street (CAMS) Act, introduced by Rep. Ed Perlmutter (D-CO), which would temporarily allow small community banks with under $10 billion in assets to spread out or amortize a portion of their commercial real estate loans over a seven-year period. These banks, which provide many of the loans to our small businesses, would then have more liquid capital available to make responsible loans.

Following several months of relatively positive business conditions, the ABI fell almost three points in April. On May 18, the AIA reported that the April ABI score was 47.6, a precipitous decrease from a reading of 50.5 the previous month. Any score above 50 indicates an increase in billings.

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