Social Media

Connect with us!
Connect with PM on Facebook, Twitter and YouTube

Jan. 15, 2008 ― Cost Escalation Reports Spread; Renewal Energy Advances

January 15, 2008
/ Print / Reprints /
ShareMore
/ Text Size+

Reports of escalating construction costs are proliferating. Commodity prices have hammered the…budget” for FasTracks, a massive Denver regional rail project due to break ground late in 2008, the Denver Business Journal reported on Jan. 11. “Originally billed at $4.7 billion when voters approved the project in 2004, it’s ballooned to $6.1 billion-driven largely by annual, double-digit increases in the price of raw materials needed to build the rail lines and cars.”

On Jan. 6, the Associated Press reported that the “ballooning $1.8 billion cost” of FutureGen, a “groundbreaking power plant in central Illinois” that would trap greenhouse gases and store them underground, “has the government so uneasy it wants the project’s consortium of corporate backers to rework the design to get the price down….In southern Illinois, officials who in October 2001 announced plans for a coal-fired, 1,600 megawatt power plant about 50 miles southeast of St. Louis estimated the project would cost $2 billion. But…the price tag swelled to $2.9 billion by the time ground finally was broken in October.”

The Baltimore Business Journal reported on Dec. 21, “A billion-dollar plan to build two new clinical towers and renovate Johns Hopkins Hospital’s East Baltimore medical campus, one of the nation’s largest health construction projects, is $252 million over budget and two years behind schedule.”

One contributor to rising construction costs is diesel fuel. On Jan. 14, the Energy Information Administration reported that the national average retail price of on-highway diesel was $3.33 per gallon, down 5 cents from last Monday but up 86 cents (35%) from a year ago. In its latest “Short-Term Energy Outlook,” released on Tuesday, the agency wrote, “Both motor gasoline and diesel prices are projected to average over $3 per gallon in 2008 and 2009, with monthly average gasoline prices peaking near $3.50 per gallon this spring.”

“For the first time in four years, the national vacancy rate for office buildings rose in the fourth quarter, as an unusually large amount of new space came on the market and tenants shied way from signing new leases,” the Wall Street Journal reported on Jan. 7. “Demand for commercial buildings has begun to slow and vacancy rates to climb in several markets…that have been particularly hard hit by the nation's housing slump and turmoil in the residential mortgage market….

“Nationally, the office vacancy rate-as measured by 79 metropolitan markets-rose to 12.6% at the end of the fourth quarter from 12.5% at the end of the third quarter, according to Reis Inc., a New York real-estate research firm….Even as tenants began to pull back on leasing in the fourth quarter, developers added more space to the market. More than 19 million square feet of new office space was completed-the most since the fourth quarter of 2000, at the height of the last boom….This year, about 75 million square feet of new office space is scheduled to come online in the 79 markets Reis tracks, up from about 53 million square feet finished in 2007….

“Not all markets are showing signs of suffering….Boston saw average effective rents-or the price tenants pay after concessions-jump 4.9% in the fourth quarter, and New York City's average rose 3.9%. Denver and Houston showed similar gains.”

Markets with the largest increases in vacancy rates were San Bernardino/Riverside, California, 1.9 percentage points; Orange County, Calif., and Fort Lauderdale, 1.7; and Las Vegas, 1.6. “Those numbers don't reflect sublease space available due in part to mortgage companies going out of business.” A chart with the article showed smaller increases in vacancy rates in Salt Lake City, Tacoma, Austin, Hartford, Phoenix and the Maryland suburbs of Washington.

“General Electric Co.’s energy investment business, buoyed by rising demand for alternative power, said Monday it will increase its investment in renewable energy by 50 percent, to $6 billion by 2010,” the Associated Press reported today. “The most active investment in renewable energy for GE Energy Financial Services is wind, representing about two-thirds of its portfolio….The company is also invested in landfill gas-to-energy projects, solar power projects in California, a solar power plant in Portugal and other deals. GE Energy Financial Services also said Monday it is investing in [four] wind farm projects owned by Horizon Wind Energy LLC, a Houston-based developer that is a subsidiary of Energias de Portugal SA. The wind farms are in Illinois, Minnesota, Oregon and Texas.”

The Peoria, Illinois, County Board on Thursday approved rezoning of 33 acres in Mapleton, 10 miles southwest of Peoria, to build a “biodiesel manufacturing plant that would…produce 45 million gallons of fuel annually, equivalent to 10 percent of all the biodiesel fuel produced in the United States last year,” the Peoria Journal Star reported. “If built, the Mapleton biodiesel plant would be one of five in Illinois, with two already in production…and two under construction. Plans already are in place to expand the proposed plant's capacity to 120 million gallons within its fourth year of operation….For comparisons, U.S. production of biodiesel topped 250 million gallons in 2006, according the National Biodiesel Board. Estimates for biodiesel production in 2007 are at about 450 million gallons.” The developers have not committed to build the plant, however.

Did you enjoy this article? Click here to subscribe to Plumbing & Mechanical. 

Recent Articles by Ken Simonson

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

BNP Media's Plumbing Group Visits Grundfos North American Headquarters

BNP Media’s Plumbing Group, comprised of the Plumbing & Mechanical, Supply House Times, PM Engineer (pme) and Reeves Journal brands, recently visited Grundfos’ new North American headquarters building in the western Chicago suburb of Downers Grove, Ill.

THE MAGAZINE

Plumbing and Mechanical

March 2014

2014 March

In the March issue of Plumbing & Mechanical, read about the 'living in place' movement and learn how to make your space stylish and comfortable. PM catches up with MCAA president Chuck Fell and spoke with him about his goals for the year. Also in this issue, see the top products of 2013, see who is the March Truck of the Month, and read the latest Tool Tips.
Table Of Contents Subscribe

Trade Associations

Are trade association memberships and participation beneficial to your company?
View Results Poll Archive

The Plumbing and Mechanical Store

plumbing-hvac.gif
2014 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Truck of the Month

Truck of the month

Are you proud of how your service truck looks? Do the graphics give people whiplash as they drive by? Have your calls increased because people remember your truck — and your company name? If so, we’d like to see it, too! Click here to find out how your service truck could be chosen as PM's Truck of the Month.

 

STAY CONNECTED

Connect to PM on Facebook Connect to PM on Twitter  Watch PM on YouTube    Connect to PM on Linked In