A bottleneck of paused construction activity, as we all know, occurred about five years ago because of the pandemic reaction. As the world returned to normal, Designhaus experienced peak demand for new services in commercial and residential development in 2022. This was a leading indicator for rising trends in actual development activity in 2023 because drawings and permits precede construction. But the pandemic based federal spending which caused inflation and interest rates to jump hit like a boomerang. By mid-2023 our inquiry rate was 20% lower and remained as such until mid-2024.
Working in 37 states and most categories of real estate development, I trust my statistics to be at least a bit more reliable than anecdotal. The AIA Architecture Billing Index (ABI) tracks with our experience as well. Last Published ABI data, December 2024, is showing the shrinkage declining. In other words, quarterly, the percentage of national architect inquiry reductions was smaller than 120 days prior. Here at Designhaus I have up to the minute stats. Since October 2024 (trailing 90 days from today), we are back at our high 2022 levels of new monthly inquiries. That may seem “okay” and no reason for a party at first glance, but consider the bracket of dates…hunting season, presidential election season, Thanksgiving, Christmas and New Years…this is typically the 90 period of the development world “at rest”.
If I am reading the tea leaves correctly, 2025 is likely 30% more business activity than 2023 or 2024, although our revenue stream will trail 6 months behind as we onboard new projects. What does this mean for the development world? It likely means that brokers are seeing the same uptick today that I am, but contractors may still see a decline based on the architecture industry’s ’23-’24 slow down and the 18 month period for due diligence, design and permitting phases to get caught up since the uptick started. Early 2026 should see construction booming, amplified by the likelihood of reduced interest rates and energy costs.
2025 should be steady as she goes. No reason to hide under a rock (2020), no reason to reinvent the wheel (2009). A prediction of predictability and modest to strong growth is all I have to offer. From a higher level, during my 27 years at the helm of Designhaus, we have seen stability or growth for 17 of the years and downturns for 10 of the years. Big growth years yield, on average, 70% increases, while notable downturns see only 25% reductions (not including the 2008 banking crisis).
With that said, lets pray for financial stability, world peace and personal health because these are the elements that entrepreneurs and risk takers in the construction and development world love most. Cheers!
Peter Stuhlreyer, AIA
Chief Architect, Designhaus