Industry News Briefs
February 19, 2009 Headlines
Economic Downturn Turns Into Construction Savings For Colleges
Geithner's $1 Trillion Plan May Not Save Commercial Real Estate
GAO Report Highlights Six Key Issues In FAA Reauthorization
Industry News
Economic Downturn Turns Into Construction Savings For Colleges
Chronicle of Higher Education (02/13/09) Vol. 55, No. 23, P. A1; Carlson, Scott
Colleges are well positioned to get attractive bids on construction projects, provided they have sufficient money. The economic downturn has led to diminished construction work, and materials like cement, structural steel, and lumber are expected to become cheaper in 2009, predicts Engineering News-Record. A recent report from McGraw-Hill found that commercial, non-residential construction markets fell 17 percent in 2008, including a 28 percent decline in warehouse and shopping center construction. The Los Angeles Community College District is currently launching $400 million in construction projects as part of a larger $5.7 billion expansion plan. The district is financing the construction via bonds backed by property taxes. Larry H. Eisenberg, the district's executive director of facilities planning and development, says jobs costing $40 million have been reduced to $35 million or even lower. A recent project received bids from nearly 40 construction firms, including bids from high-end firms, Eisenberg observed. Similarly, a new campus center at the Richard Stockton College of New Jersey cost roughly 25 percent less to build compared to two years ago, according to Michael C. Shatken, a partner at KSS Architects, which designed the center.
Geithner's $1 Trillion Plan May Not Save Commercial Real Estate
Bloomberg (02/12/09) Ivry, Bob; Keehner, Jonathan
Treasury Secretary Timothy Geithner's financial stability plan may not be in time to rescue the slumping commercial real-estate industry. The Mortgage Bankers Associations reports that lending has virtually dried up as $171 billion of commercial mortgages come due this year. In 2008, issuance of commercial mortgage-backed securities (CMBS) plummeted 95 percent. Geithner is pressing hard to expand an existing federal lending program to purchase the securities and spark lending activity. William Acheson, who tracks apartment REITs for the Benchmark Co. LLC in New York, laments, "CMBS is a four-letter word. The Treasury plan gets questionable paper off questionable financial institutions' books, but it will take an awful lot more confidence for people to come back to securitized mortgage pools." Bankruptcies by apartment, retail and office building owners occurred in some of the same states hit hardest by residential foreclosures in the fourth quarter, confirms data compiled for Bloomberg by Marcus & Millichap Co.'s Special Assets Group and RealtyTrac Inc. The unemployment rate, which sits at a 16-year high, pushed down the price of office space as employers downsized their operations. Looking ahead, Geithner may expand the $200 billion Term Asset-Backed Securities Loan Facility to $1 trillion and use it to purchase the highest-rated commercial and residential mortgage-backed securities. But pessimism is rampant, as evidenced by Bank of New York Mellon Corp. CEO Robert Kelly's warning to Congress on Feb. 11: "There's no question that the commercial real estate market is under a great deal of stress, and it's going to continue to be and will probably be worse a year from now than today."
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GAO Report Highlights Six Key Issues In FAA Reauthorization
GAO Reports (02/09)
The Government Accountability Office (GAO) has found six key issues related to Federal Aviation Administration (FAA) reauthorization that will be critical for system transformation and operations. The first issue, the GAO says, is ensuring safe and efficient transformation to NextGen, the Next Generation Air Transportation System: "FAA will need to accelerate the implementation of new and existing technologies, consider incentives for airlines to acquire those technologies, reconfigure facilities and enhance runways to take full advantage of NextGen's benefits, and sustain the current system while transitioning to the new one." Second is strengthening oversight of aviation safety, including better safety data and improvement of runway and ramp safety oversight. Third is reducing congestion and providing access to the airspace system: "Even as some areas experience more congestion, however, other areas of the country have seen service decline. This may increase demand for the Department of Transportation's subsidy program to provide a minimal level of scheduled air service for certain small communities." The fourth issue is addressing the environmental impact of aviation, including emissions, noise, and other pollutants, particularly as airport capacity is expanded. Finally, the fifth and sixth issues are ensuring a sufficient, trained workforce as air traffic controllers retire and NextGen is implemented, and ensuring timely reauthorization of FAA programs.
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Frank Gehry's Software Keeps Buildings on Budget
New York Times (02/10/09) Appelbaum, Alec
The New York condominium project that developer Bruce Ratner hired Frank Gehry to design in 2004 may have been conceived in the days of a housing bull market, but the software that architect Gehry brings to his projects may prove an even greater boon in the new lean times. Gehry's wavy, undulating Beekman Tower project in Manhattan near the Brooklyn Bridge will allow Forest City Ratner Companies to test the idea that the architect's modeling software can cut the costs of a building project. Fabricators have already produced a multi-textured façade at a cost Gehry says is no higher than a developer would pay for a simpler boxy building of similar size. Gehry originally developed the Digital Project software to create a diaphanous fish sculpture for a Barcelona expo in 1992, refining it to design the Guggenheim Museum Bilbao's titanium skin. The software business was spun off into Gehry Technologies in 2002 and since has been marketed to other developers, architects, and project teams to help turn any shape an architect imagines into a three-dimensional model full of concessions to the real world, such as site plan and duct work. "If you've got a $100 million cost that your bank engineer has approved, you will add $5 million or $10 million contingency for construction errors into your loan," says Donald Capoccia of BFC Partners, developer of a twisting Brooklyn residential tower. "In the future, with stricter underwriting requirements, I believe a building with a $100 million deal will have to be done for $90 million or less." Digital Project has its critics as well, however, such as Carl Galioto of Skidmore, Owings & Merrill, who says the software is hard to learn and as much as four times as expensive as industry standard Autodesk product Revit Architecture.
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IBM Eyes $122 Billion in Stimulus-backed Tech Spending
InformationWeek (02/09/09) McDougall, Paul
IBM is hoping that stimulus-backed spending will lead not only to direct funding for IT projects but also to construction of physical assets heavily reliant on smart technologies and software. "Our country must compete in a world that isn't just getting smaller and 'flatter,' but is also becoming smarter," IBM CEO Sam Palmisano recently wrote in the Wall Street Journal. Today's public-works projects are likely to make extensive use of embedded sensors that enable managers to track usage and maintenance while making operational changes in real-time based on the data gathered. This, combined with the consulting and integration services necessary, will likely prove highly valuable to the IT industry—an opportunity that IDC estimates will be worth $122 billion by 2012. On Feb. 9, IBM rolled out 10 new offerings intended to ease the combination of data from infrastructure sensors to the virtual infrastructures in computing centers, such as the Service Management Industry Solutions package and the Tivoli Key Lifecycle Manager software. "Infrastructure has always been how you stimulate business, but it's not just roads and bridges anymore," says Pete McCaffery, head of strategy for IBM's Systems and Technology group. "It's roads and bridges coupled with IT."
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What Lies Ahead for Building Materials and Products
Buildings (01/09) Bohutinsky, Andrew; Galvez, Carlos
The economic downturn's widespread effects will be felt by the construction industry as well, with non-residential construction--which has been relatively healthy until now--likely to be among the sectors seeing less activity as the downturn continues. Commercial construction has not seen the same sort of overbuilding that came before previous busts in the sector, but demand for many types of non-residential buildings tends to rise and fall with economic activity. Meanwhile, the follow-on effects from a decreased demand for commodities could prove beneficial to those developers and owners that are able to start new projects, as prices for steel and other materials are starting to decline. Restocking and weak demand are impacting the price of structural steel, which rose sharply in the first half of 2008, and rebar dropped 35 percent between October and November. There are also signs of lower cement prices. At the same time, most manufacturers have not been able to impose price increases to offset inflation in materials costs. Consequently, there will likely not be any near-term reduction in prices for finished building products as a result of the lower commodity prices.
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Secretary Salazar Details Strategy for Comprehensive Energy Plan on U.S. Outer Continental Shelf
Department of the Interior News Release (02/10/09)
U.S. Secretary of the Interior Ken Salazar has unveiled a strategy for a proposed five-year plan for oil and gas development on the U.S. Outer Continental Shelf (OCS). This includes developing a framework for offshore renewable energy development that includes wind, wave, and ocean current energy. The original deadline for the five-year plan was March 23, 2009, which Salazar is seeking to extend by 180 days. Salazar also called for a detailed report from Interior agencies like the Geological Survey and the Minerals Management Service on offshore energy resources. He also intends to hold four regional conferences for interested parties to review the findings and accelerate renewable energy rulemaking for the OCS. Salazar observed that the chief component of the draft OCS plan is oil and gas drilling along the Atlantic seaboard from Maine to Florida, but "our data on available resources is very thin, and what little we have is twenty to thirty years old." He added, "I intend to issue a final rulemaking for offshore renewables in the coming months, so that potential developers know the rules of the road. This rulemaking will allow us to move from the ‘oil and gas only' approach of the previous administration to the comprehensive energy plan that we need."
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Catching Some Rays
Wall Street Journal (02/09/09) P. R5; Chernova, Yuliya
Growing interest in solar power is prompting some lawmakers and utilities to remove existing restrictions on solar installations for multi-unit residential buildings. For example, a new rule from the California Public Utilities Commission (PUC) that takes effect in March 2009 facilitates the installation of solar power at affordable, multi-unit housing properties. The new PUC rule allows utility companies to measure the electricity entering into the power grid from a building's solar power system. Apartment dwellers receive credits on their power bills based on the size of their residential unit via virtual net metering. This indicates that utilities use a space-based or other formula to estimate power usage for each unit. Owners of the housing developments pay for installation and recover these costs via a monthly flat fee charged to renters. The state of New York provides condominium and cooperative housing owners with a 25 percent tax credit for installing solar energy systems. In Massachusetts, the recently enacted Green Communities Act enables "neighborhood net metering," where residents of several housing units can become co-owners of a solar-power system and use the power generated to reduce their individual bills. The approach is currently being considered by states like New Jersey, Virginia, and Colorado.
The Role of Wireless Technologies in the Water Utility Industry
Water Utility Management -- Water Utility Management (01/09) P. 5; Stern, Chris; Iadarola, Brent
More and more water and wastewater utilities are turning to wireless technologies to assist them in supervising staff, data, and assets. An 18-month joint study by Trimble's Utilities Field Solutions, Frost & Sullivan, and several U.S. water utilities found that there is a strong business case for implementing mobile technologies for utilities. The research suggested that enterprise mobile computing could lead to as much as 30 percent yearly improvement in service and efficiency in addition to data security enhancement and improved health and safety of workers. The study also confirmed that Mobile Resource Management (MRM) solutions can help pass on knowledge to the next generation of employees as the industry faces a large number of retirements over the next decade. MRM solutions include technologies that track, collect, and assess information about a utility's assets. The use of Geographic Information Systems (GIS), Global Positioning Systems (GPS), and Location-Based Services (LBS) were found to be useful in saving time and costs related to maintaining an aging infrastructure. For instance, researchers estimated that a mobile GIS solution can potentially double the number of features visited in a day, such as valves, access holes, and fire hydrants. The study also found that more than 91 percent of respondents said wireless solutions implemented for field workers met or surpassed expectations in boosting customer service and response time.
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Building the Next Generation Utility
Public Utilities Fortnightly (01/09) Vol. 147, No. 1, P. 54; Azagury, Jack
The next generation utility must integrate energy efficiency with conservation. At a time when public and government concern over climate change is forcing utilities to search out new methods to lower their carbon footprint, and generation and distribution limitations are fueling calls to upgrade the U.S. power grid, the utility industry is at a crossroads. Approximately $400 billion to $1 trillion will be needed over the next two decades to bring the nation's electrical infrastructure up to code. The demand for energy efficiency means utilities will experience a decline in energy sales, and a surge in requests for services that allow them to manage their consumption and scale back peak loads. To meet these demands, utilities have assembled a patchwork of initiatives with themes that address the challenges facing the industry, including renewable energy, smart technologies, generation capacity, infrastructure and transmission and distribution. Not only will utilities will need to make fundamental changes to their customer-facing-capabilities, but they will also need to position themselves in a strategic way to deliver a more diverse array of services that promote energy efficiency, demand response and sustainability. Such services would include HVAC leasing, energy monitoring, carbon offsetting, energy audits, and large scale property portfolio efficiency management.
All-weather Pavement Marking System Ready for Test
Innovator (U.S. FHWA) (01/01/09) No. 10,
An all-weather pavement marking system developed by 3M is ready for tryouts in the real world after proving its worth in simulated conditions. The system, designed to enhance safety in work zones by making it easier for drivers to navigate, consists of high–build waterborne paint and glass beads that provide good visibility in dry conditions as well as optical elements made of a ceramic core surrounded by tiny, high–refractive–index beads to boost visibility in wet conditions. The technology was developed through funding from the U.S. Federal Highway Administration's Highways for LIFE initiative.
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Imported Drywall May Be Damaging Indoor Environments
Indoor Environment Connections (01/01/09) Vol. 10, No. 3, P. 1; Scarlett, Tom
The indoor air quality (IAQ) industry is worried that certain types of drywall may be damaging indoor environments through the corrosion of copper piping, the destruction of air conditioning coils, and other impacts. Some IAQ experts think hat the problem may be related to a surge in the amount of drywall imported from China after demand exploded following Hurricanes Katrina and Rita four years ago. A probe conducted by Environ International determined that drywall from China was contributing to the emission of sulfur-containing gases in Florida homes. Ron Bailey of Bailey Engineering says he is aware of several instances involving pipe corrosion caused by the drywall and that there seems to be a connection between humidity and the start of the problem. "We need to see some good science on this problem," he says. "So far everyone has been left chasing rumors." Another investigation into drywall's effects concludes that "the greatest problem is the pitting corrosion of copper piping, [such as HVAC]. This corrosion will continue even after the source is removed. By contrast, oxidative corrosion, which is green, protects the underlying copper." It has been observed that repeated coil failures in certain homes, in conjunction with installation/in-service dates and assessment of new corrosion, suggests that the release of the sulfur-containing gases from the Chinese wallboard can continue for at least two years.
The Sweet Solution
Governing (01/09) Vol. 22, No. 4, P. 52; Anderson, Carol
Snow Belt states have turned to a byproduct of the process of extracting sugar from sugar beets to cope with the skyrocketing cost of salt when de-icing roads. The price of salt is two- to three-fold more than it was last year. The byproduct of the extraction process is a brown liquid that lowers the freezing point of road treatments. It can reduce the costs of de-icing by replacing more expensive pre-treatment materials and by reducing the amount of rock salt needed. What's more, it is not corrosive. North Dakota has been using the technology for five years, mixing it with salt brine to lower the freezing point of the brine from 6 degrees Fahrenheit to as low as -30 degrees Fahrenheit, depending on how much of the sugar beet solution is used. Geomelt, the brand name of the solution used by the state, costs about a third per gallon less than alternative de-icing additives like magnesium chloride. Another brand name is Ice Bite.
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