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Sunday, 14 April 2013 22:00

AIA index shows continued improvement

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WEST MICHIGAN — Gains in architecture billings nationally continue to give some regional firms confidence in the markets they serve.

The latest national Architectural Billings Index (ABI) from the American Institute of Architects was 54.9 for February, signifying the strongest growth in billings at architecture firms since the downturn began in early 2008, according to the report. Any score above 50 indicates growth.

Lansing-based C2AE, which has an office in Grand Rapids, is experiencing some of that growth, said Bill Kimble, the firm’s president. The company is in the midst of a number of municipal projects, he said, reporting that health care-related facilities renovations also is a strong sector for the firm. Industrial projects are also filling the company’s backlog, he said.

“A few months out, I think we still see an uptick in the industrial sector — and for the rest of the year as well as into next year,” Kimble said. “For us, we have some new government contracts, which I know sounds odd, but we’re actually seeing some new military and veterans affairs projects for the next few quarters.”

From the first quarter to the second quarter of this year, Kimble said the company expects to see work increase 20 percent, and he hopes to continue that growth through 2013. The tail end of 2012 saw some slight drop off in work on the books, but current activity indicates the company is just catching up as the firm is looking at about a six-month backlog, he said.

“In some sectors, we’re seeing big projects move forward in the greater Lansing area, and Grand Rapids continues to see improvement,” he said. “We’re optimistic about more private development.”

Underscoring Kimble’s remarks is the ABI’s commercial/industrial index reading, which came in at 53.3 in February, the third straight month that billings activity exceeded 52 for this sector, according to the report.

As a whole, the Midwest regional index came in at 54.7, a slight improvement on last month’s reading of 54.4. In spite of ongoing concerns over the so-called fiscal cliff, the sequestration of federal spending, the threat of a federal government shutdown, and the prospect of federal borrowing bumping up against the debt ceiling, the broader economy continues to make slow but steady gains, according to the AIA report.

While the consequences of sequestration have yet to trickle down, Kimble said most clients are keeping a close eye on any federal government action. However, projects aren’t getting scrapped in fear of any future financial stress at this point, he added.

In fact, hiring is up across the board, according to the AIA report. U.S. Bureau of Labor Statistics data through the first two months of the year show a net increase of 355,000 payroll positions, with 73,000 of those positions (more than 20 percent) added in the construction sector.

While increased housing starts have had a lot to do with the recent hiring activity, the nonresidential sectors are also adding positions. Almost 28,000 nonresidential contracting firm positions were added in the last two months, accounting for 38 percent of all positions added to the construction industry.

Payroll levels at U.S. architecture firms, which increased by about 2,000 positions last year, is reflected in some local hiring. Grand Rapids-based Progressive AE, which last year merged with Design Plus, another Grand Rapids-based firm, continues to grow its employee base, said Mike Perry, executive vice president at the firm. Progressive has been in a hiring mode for the last two years, he said.

“Not including the merger, we’ve added 60 people in the last year. That’s a pretty good pace,” Perry said. “We’ve gone from about 90 (employees) to 170 with the merger.”

Perry said merger and acquisition activity in the industry could let up as the economy improves and the push lessens to merge for the sake of efficiencies, but strategic buyers remain on the hunt.

Perry said Progressive’s backlog is estimated at roughly nine months, and the company has several large projects between $5 million and $20 million in the pipeline.

“It’s just a better environment today,” he said. “In general, it’s very strong out there. It’s the strongest we’ve seen since early 2008 and strong across a number of different markets.”

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