WASHINGTON, DC—Talk about the irony of timing—or should that bethe inescapable grip of market supply and demand? At any rate, onWednesday the American Institute of Architectsannounced that the Architecture Billings Indexreached its highest level since 2007 in July with a score of was55.8, up markedly from 53.5 in June. The bottom line conclusion,according to AIA chief economist Kermit Baker?"Business conditions for the design and construction marketplace,and those industries associated with it, appear to bewell-positioned for continued growth in the coming months."

Just in time, as it happens, for accelerating constructioncosts. Over the past few days we have been looking at twin threatsto the commercial real estate industry—the almost sure likelihoodof rising interest rates and the rapid ascent of constructionprices. Interest rates hikes are coming, but they are not here yet,while construction increases are. With that as background we askeda number of readers which was worse. A behavioral scientist mightopt for the construction costs: those are happening now, while thepain of future rate hikes are still unrealized. And manyrespondents did agree-they are worse. But others are moreleery of rate hikes. Read on to see the reasoning in bothcamps.

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