Architecture firms in Iowa are facing a persistent dip in invoices for upcoming projects, suggesting that the state's construction industry will face continuing struggles. This trend was highlighted by the Iowa chapter of the American Institute of Architects (AIA).

Why This Matters

The decline in billings is closely connected to future construction activity, a critical sector for Iowa's economy and workforce.

With both national and Iowa-specific data showing a downward trajectory, the broader building industry could remain sluggish into 2026, posing significant challenges for the state's commercial real estate market, according to Iowa State University economist Peter Orazem in an interview with Axios.

Key Developments

According to the AIA's most recent national report, the billing index has decreased for 27 out of the past 30 months, ending in March. This long-running slump underlines the extended nature of the downturn.

The Iowa chapter of the AIA also conducted a separate survey, revealing that 11 out of 20 architectural firms (or 55%) cited the office market as their slowest. This sector lagged behind a dozen other industries, including single-family housing and manufacturing, further emphasizing the strain on commercial real estate.

A Surprising Statistic

By August 2024, construction employed nearly 86,000 workers in Iowa, contributing billions of dollars to the state’s GDP, as per the Associated General Contractors, an Arlington-based trade association.

Deeper Insight

The shift toward hybrid work continues to dampen demand for commercial office space, says Orazem. While the metro area's office vacancy rates are lower than the national average, they have yet to recover to pre-pandemic levels. Businesses like Principal Financial Group have entire office floors sitting vacant, further complicating the sector’s recovery.

Industry Leaders Speak Out

Jessica Reinert, the executive director of AIA Iowa, commented that the industry's challenges are expected to persist due to the downward trend in the general market and ongoing uncertainty around building material availability. "With the general market trending downward and uncertainty regarding the availability of building materials, the industry's challenges will likely continue," Reinert noted in a press release.

Orazem also expects several more months of difficulties stemming from office vacancies. "Until you get enough growth to fill the available space, this will be a long-term issue," he warned.

What’s Next

Amidst these challenges, the city of Des Moines (DSM) has announced plans to sell off three historic municipal buildings, while the federal government is in the process of selling the long-standing U.S. Courthouse in downtown. Moreover, an eight-month search to find a redeveloper for City Hall recently concluded without any successful bids.

The growing number of available office spaces, coupled with declining construction billings, reflects the tough landscape for Iowa’s architecture and construction sectors. The state could face significant economic and workforce challenges in the coming years unless there is a turnaround in market conditions.

Originally reported by Jason Clayworth in AXIOS.