Reading between the trend lines

Published: August 6, 2020 | Updated: August 11, 2020

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To offer context to timely issues and complement AIA’s monthly Architecture Billings Index (ABI), this is the first in a series of interviews with AIA Chief Economist Kermit Baker, Hon. AIA, intended to help you navigate this recession.

America's economy just posted one of its worst quarters ever, although GDP losses during the Great Depression are still far greater than today. If there is good news, it’s that we seem to be following the path most economists predicted of a sharp drop and a slow, but steady, recovery through the end of 2022. What should firms do with “slow, but steady,” and what does that mean for architecture?

Four months ago, the perception was that if we shut down the economy, we will have a horrendous second quarter. But in doing so, we’ll get rid of a virus and solve a public health crisis—and by the fourth quarter we’ll be out of it. The whole thing will have been a quick, bad dream. That’s not the storyline at all. We are not making much progress. So, let’s not focus on the second quarter of this year, which has been the big headline recently. Instead, let’s ask what does more recent information suggest about the path forward? What’s the implication for architects?

Non-residential construction is a typical lagging indicator for the economy, for good reasons, which is the basis of the AIA’s Architecture Billings Index. Why? Because building buildings is basically a capital expenditure for companies, which produce what they need to produce until there’s sustained demand and they need to double their production facility, or add more retail spaces, or create bigger hospitals, which is what they do during the good times. Right now, we don’t know what’s going to happen and, for various reasons, these companies haven’t outgrown the spaces they already have; they don’t need “more,” in other words. That’s why the ABI has dipped. The silver lining, though, is that we can retrofit what’s out there. Virtually all facilities are, in some fundamental way, ill-equipped to accommodate and safeguard the health of workers, patients, caregivers, students, and so on, in a pandemic environment. Stores, offices, schools—nothing we have is designed for what’s going on. So, there’s a real opportunity there for architects to address the current building stock, retrofit buildings, and adapt spaces—activities that also happen to be environmentally conscious and sustainable.

Another thing to consider is the short-term and long-term implications of adaptation for clients. The solution for restaurants, for example, is not— and never will be—a permanent distance of six feet between tables and a permanent state of doing 10 percent of the in-person business they were doing before, even if offering take-out has proven to be a solid bridge activity in the short term. So, the role for architects, then, might be about working with them to find a design solution to return to profitability and maintain standards of safety. We surveyed our ABI panel a month and a half ago asking if architects had received inquiries from clients about renovating their spaces, and about 37 percent said they’d had specific discussions with their clients, and about 28 percent of respondents had recorded more general, preliminary discussions with their clients, so it’s a topic on the table.

Do you have questions about the economy you’d like AIA to consider? Email economics@aia.org

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