The AIA/Deltek Architecture Billings Index (ABI) score was 45.5 for the month, indicating that a majority of firms are still experiencing declining firm billings.
Billings were flat early in the fourth quarter of 2024 but have softened significantly since then. February also marked the first month since the height of the pandemic in 2020 that inquiries into new projects at firms have declined. Inquiries can be as formal as an RFP or RFQ from a potential client, or as informal as a discussion about a potential project, and rarely decline, even during periods of economic softness.
The decline this month likely reflects the ongoing uncertainty about the economy at this time. In addition, the value of new signed design contracts decreased at firms for the twelfth consecutive month in February, as clients also remain hesitant to commit to new projects at this time.
Northeast firm billings remain weakest
Billings remained soft in all regions of the country in February as well. While firms located in the West reported modest growth throughout the fourth quarter of 2024, business conditions there have softened somewhat since then.
Billings remained weakest at firms located in the Northeast, with more moderate declines in billings reported at firms located in the Midwest and South. Business conditions were also weak across firms of all specializations this month, remaining softest at firms with a multifamily residential specialization for the second consecutive month.
Firms in the West, or focused on institutional building, show highest profitability
This month’s special practice questions asked architecture firms about profitability trends at their firm in recent years and factors impacting their profitability. Overall, slightly more than half of responding firm leaders (52%) reported that their firm’s profitability topped 10% in 2024, with 11% reporting that it was 25% or higher, for average firm profitability of approximately 12% in 2024. Firms located in the West, and those with an institutional specialization, tended to report the highest levels of profitability, as did large firms with over $5 million in annual billings.
