Architecture billings fall to record low

The latest information from the American Institute of Architects paints a bleak picture for the architecture industry.

The November national index number of 34.7 is the lowest in the 13-year history of the Architecture Billing Index, which measures billings by industry and geographic region. That number is down 1.5 points from the previous record of 36.2 set in October. Any index below 50 indicates a decline in billings.

Closer to home, the numbers are even bleaker. The Midwest index clocked in at 31.4, the lowest of any region.

"Typically here in the Midwest, (trouble) doesn't hit us as quickly as it does the coastal areas," said Todd Bolin, senior associate with H Design Group and president-elect of AIA Springfield. "But I think it's finally hit in this area."

Even sectors that have traditionally carried the architecture industry through tough times are dropping. On a national level, the mixed-practice and institutional sectors came in at 44.5 and 40.8, respectively. While they are the strongest of the sectors, they are still in negative territory.

"With mounting job losses, declines in retail sales, and travel cutbacks, the need for new commercial facilities has dropped considerably recently," AIA Chief Economist Kermit Baker said in an association news release.

"What's just as troubling is that the institutional sector ... is also beginning to react to tighter credit conditions and a weakening economy."

The local impact

Springfield's institutional sector isn't immune.

Phil Broyles, assistant director of Public Works for the city of Springfield, said the city is in a holding pattern for construction projects, except for those that have specifically designated revenue sources such as state or federal grants.

He added that any money the city has available for construction will have to go toward maintenance and repair work.

"If I had a few million right now to spend, most of it would go for roofs, HVAC improvements, tuck-pointing and new windows," Broyles said. "We have some other major needs - we have space problems at Municipal Court that need to be addressed at some point. But what I have to do is look for ways to fix and repair buildings first."

Chris Ball, president of Jack Ball & Associates Architects PC, said business has slowed somewhat, though he declined to disclose specific billings or revenue figures for the company.

Ball said his practice, which gets about 75 percent of its business from the institutional sector, has not seen the same slowdown as other firms that rely more on private commercial business. He added that he has not had to reduce staff, due mostly to his ability to do more long-range planning with clients in the educational sector.

"We may be understaffed at some times and have to work harder as a result, but by not hiring people, it protects us from having to lay off when it slows down," Ball said.

The strategy seems to be paying off. Jack Ball & Associates was one of five southwest Missouri companies to make Inc. magazine's 2008 list of the 5,000 fastest-growing companies in the U.S.

Jack Ball & Associates was No. 1,077 on the list, posting 2007 revenues of $2.6 million and 349 percent growth for the three-year period.

The future

The horizon doesn't look terribly bright for the design industry, either; the ABI's project inquiries index, which measures interest in future projects, dropped to a historic low of 38.3.

The Springfield R-XII School District is among local entities pulling in the reins on building projects. The school board voted Dec. 9 not to put a new bond issue on the ballot in April. The district is nearing completion of the list of projects funded by the $96.5 million bond issue approved by voters in April 2006.

"I think our board is well aware that we still have several needs in the district, and we need to go for another bond. It's just a matter of timing," said Scott Wendt, the district's director of capital construction.

He noted that the board has left open the possibility of asking for a bond later in 2009 or in early 2010.

In the meantime, the district is temporarily putting off several projects, including adding air conditioning to the remaining schools in the district that lack it and potential renovations to Jarrett and Reed middle schools.

The situation is similar for the city, where Broyles said three major construction projects - the parking decks at Heer's and College Station and the state crime lab facility - are complete.

" ... We've used the funding we have for buildings, and now ... we're waiting until we can reload," Broyles said.

AIA Springfield President-elect Bolin said he's not surprised by the wait-and-see approach of the schools and the city.

"People are still going to need hospitals, schools, those types of services," he said. "But even those, I think, will slow down because they get their money from the people, and if those people aren't willing to vote for the bonds, they'll have a hard time getting those projects done."

Ball said he has not seen a significant slowdown in project inquiries - he points to school districts such as Mountain View-Birch Tree, which passed a tax levy increase for new construction in November - but he has seen more competition for the available jobs.

"Private sector designers are now actively going after those public sector projects that are in play," Ball said. "Certainly, small businesses ... have slowed down the most, because they are the ones that slow down the most in a down economy, and even if you have a great business and have some money to do a project, it's very hard to borrow."