Credit Market Condition Not Likely to Affect Plans to Build Green Buildings
Despite the concerns about the availability of credit, 75 percent of commercial real estate executives said they would not be any less likely to construct “green” buildings, according to the Turner Construction Company 2008 Green Building Market Barometer survey. “We are very encouraged to see that real estate professionals continue to recognize the value of building green,” commented Michael Deane, vice president and chief sustainability officer at Turner. “Given the demonstrated environmental and economic advantages of green buildings, we are seeing a continued increase in green construction across all market sectors.
Turner’s 2008 Green Building Market Barometer survey found that commercial real estate executives viewed green buildings as having lower energy, operating and lifecycle costs, higher building values, asking rents and occupancy rates. Respondents also noted that green buildings can generate greater investment returns.
Green Buildings Lead to Long-Term Cost Savings. Eighty-four percent of executives said that energy costs were lower in green buildings, and 68 percent said overall operating costs were lower. Green buildings create an attractive cost/benefit ratio according to most executives, and are considered to be less expensive than non-green buildings for several key measures of cost.
The Further Case for Green. In addition to a reduction of energy costs, improved health and well-being of occupants (76 percent), increased building value (72 percent) and higher asking-rents (65 percent) were most often cited as benefits of green buildings. Survey respondents noted several other benefits to green building, including overall higher return on investment (52 percent), higher occupancy rates (49 percent), increased worker productivity (46 percent) and improved learning in schools (41 percent).
Green Construction and the Importance of LEED® Certification. Real estate executives surveyed were asked about the likelihood that they will seek LEED® (Leadership in Energy and Environmental Design) certification if they are involved in green building over the next three years. Although 54 percent of executives noted that the cost of LEED® documentation is an “extremely” or “very significant” obstacle to green construction, 83 percent of executives said they would be “extremely” or “very likely” to seek LEED® certification if they are planning to build within the next three years.
For those seeking LEED® certification, 40 percent expect to pursue Silver, 26 percent will seek the Certified level, 25 percent will pursue Gold, and 10 percent would go for Platinum. Among executives who think the first cost of green buildings to be higher, roughly three-quarters believed green buildings can pay back their higher initial costs, with this figure rising to 84 percent among those who would seek a Gold or Platinum certification. The median estimated payback period cited by executives for sustainable features was seven years.
Obstacles to Green. When asked to rate a series of issues that could potentially discourage the construction of green buildings, executives rated the following as presenting an extremely or very significant obstacle to green construction: the costs of LEED® documentation (61 percent), higher construction costs (61 percent), the length of the payback period (57 percent), and the difficulty quantifying the benefits of green building (43 percent).
About the Survey
The Green Building Market Barometer findings are the result of the fourth independent online survey commissioned by Turner Construction Company since 2004. The 2008 Green Market Barometer focused on executives involved in commercial real estate.
The survey of 754 respondents was comprised of executives at companies representing a cross-section of the real estate industry, including developers (37 percent), rental building owners (31 percent), brokers and real estate services (27 percent), architectural/engineering/ construction (22 percent), and other (23 percent). The percentage figures above total more than 100 due to the respondents’ ability to offer responses in multiple industry segments.
U.S. Demand for Green Building Materials to Exceed $80 Billion in 2013
The U.S. market for “green” building materials generated sales of almost $57 billion in 2008. This market is projected to expand 7.2 percent annually to more than $80 billion in 2013, outpacing the growth of building construction expenditures over that period. Although green building materials are expected to account for an increasing share of materials used, growth will be driven primarily by the recovery of the residential market through 2013 as it rises from its depressed 2008 level. These and other trends are presented in Green Building Materials, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.
Forest Stewardship Council–certified lumber and wood panels are expected to be the fastest growing green products, albeit from small bases. FSC-certified products are produced via environmentally responsible and socially beneficial forestry practices. As the supply of FSC-certified wood grows, demand for FSC-certified wood panels is projected to more than triple between 2008 and 2013, growing more than three times as fast as the overall market for wood panels.
Other products expected to see fast growth through 2013 include water-efficient plumbing fixtures and fittings, and energy-efficient lighting fixtures. Demand for each of these products is forecast to grow at a double-digit pace through 2013, but account for only a small share of total green building materials market.
Over the forecast period, the greatest absolute gains will come from green floor coverings, the largest source of green building materials demand. Green carpets and flooring include Green Label Plus–certified carpets and products made from rapidly renewable resources (such as bamboo and cork flooring).
Concrete made from recycled materials (such as fly ash, blast furnace slag) had the second largest share of green building materials demand in 2008, accounting for more than 15 percent of the market total. The use of recycled materials in concrete not only reduces the volume of waste sent to landfills, but often enhances the performance of the concrete. Going forward, demand for concrete made from recycled materials is forecast to grow 8.4 percent per year to $14.3 billion in 2013, accounting for an increasing share of total concrete used.
You Name It, It’s Still Falling
With economic momentum still sliding down, and despite unfathomable bailout and stimulus funding, the housing and multifamily housing markets are still not rebounding. In fact, the credit crunch is still limiting these construction sectors from recovering. Add to that a decrease in builder confidence, consumer confidence and another dip in the employment rate, and the summer is not looking too bright for construction.
Jobs in the nation’s nonresidential construction industry fell by 16,800 in February, according to the March 6 report by the U.S. Labor Department. This comes one month after the industry suffered its deepest drop in employment in more than 20 years. Employment in this sector now stands at 764,400. Since February 2008, the nonresidential building construction industry has lost 78,300 jobs or 9.3 percent of its work force.
The residential building construction industry lost 15,600 jobs since January and 135,500 from February 2008. Total private construction employment, which includes specialty trade contractors, fell by 104,000 jobs for the month and 826,000 from a year ago.
Overall, national employment dropped by 651,000 in this short month, 1,987,000 in the past three months, and 4,168,000 on a year-over-year basis. The unemployment rate is now 8.1 percent—the highest since December 1983.
“Incredibly, the employment report could have been worse had February had more days,” said Associated Builders and Contractors Chief Economist Anirban Basu. “[February] had roughly 10 percent fewer days than January.
“On that basis alone, monthly job numbers can be expected to deteriorate in the months ahead,” added Basu. “Meanwhile, over the course of February, the credit crunch actually seemed to worsen and additional wealth was lost in the financial and real estate markets.
The National Association of Home Builders/Wells Fargo Housing Market Index, released Feb. 17, held in the single digits for a fourth consecutive month in February. The HMI rose a single point to 9—virtually unchanged from an all-time record low in the previous month—indicating that home builders have seen essentially no improvement in the market for new, single-family homes.
The NAHB also reports that the “stunning” downswing in housing starts and building permits has accelerated in recent months. “Total housing starts fell by 16.8 percent from December to January, the year-over-year decline came to 56.2 percent, and the decline from the January 2007 peak now stands at 80 percent,” NAHB’s Eye on the Economy reports. Multifamily starts are in a “rapid contraction phase,” NAHB says.
Continuing an uninterrupted free-fall, U.S. housing starts and permits fell for a seventh consecutive month in January, according to U.S. Commerce Department figures reported Feb. 18. New-home production fell by 16.8 percent to a seasonally adjusted annual rate of 466,000 units, while permits for new housing construction fell 4.8 percent to a rate of 521,000 units. Both of these numbers were new record lows.
“Builders are continuing to exercise extreme caution in response to market conditions, particularly weak consumer demand and the large inventory of homes for sale that is being fueled by a constant flow of foreclosures,” said National Association of Home Builders Chairman Joe Robson, a home builder from Tulsa, Okla. “We are certainly optimistic that the newly signed economic stimulus package—and particularly the enhanced first-time home buyer tax credit—will help spark more consumer demand for homes going forward. However, until that happens, builders have little choice but to put a hold on new construction.”
Single-family housing starts fell 12.2 percent in January to a record-low seasonally adjusted annual rate of 347,000 units, while multifamily starts fell nearly 28 percent to a rate of 119,000 units—also a record low. Regionally, starts plummeted nearly 43 percent in the Northeast and 29.3 percent in the Midwest. They also fell 12.8 percent in the South and 6.4 percent in the West.
January permit issuance, which can be an indicator of future building activity, declined 8 percent to a seasonally adjusted annual rate of 335,000 units on the single-family side and 1.6 percent to a rate of 186,000 units on the multifamily side. Regionally, permits were down 3.3 percent in the Northeast, 2.4 percent in the Midwest, 6.9 percent in the South and 1.8 percent in the West.
Data from the U.S. Commerce Department also indicate that sales of newly built, single-family homes fell 10.2 percent to a seasonally adjusted annual rate of 309,000 units in January, which is a new record low.
“Clearly, the downward pressures that have been exerting themselves on the housing market remain in place, including the weakened economy, ongoing job losses and very low consumer confidence,” said NAHB Chief Economist David Crowe. “But as more home buyers find out about the newly enhanced tax credit, and other parts of the economic stimulus package start kicking in, we expect to see some firming effect on home sales. The hope is that a certain amount of pent-up demand will be released as those who were in a ‘wait-and-see’ mode decide they now have the information they need to proceed.”
Home builders continued to do a good job of reducing their inventories in January, with the number of new homes on the market falling for a 21st consecutive month to 342,000 units. However, due to the historically slow sales pace, the months’ supply continued to rise for a fourth consecutive month, to 13.3.
Three out of four regions posted declining new-home sales in January. Sales fell 5.6 percent in the Midwest, 6.5 percent in the South and 28 percent in the West. The Northeast was only exception to the rule, registering a 12.5 percent gain for the month.
On the positive side, Federal Reserve Chairman Ben Bernanke reported to Congress that “there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery.” Recovery, however, depends on the success of actions taken by the administration, Congress and the Federal Reserve, he emphasized.
NAHB says that its forecasts jive with Bernanke’s hope. To learn more about NAHB’s construction forecasts, visit www.nahb.org. The association has scheduled a Construction Forecast Conference & Webcast on April 23. For information, visit www.nahb.org/cfc.
Architects Report All Building Sectors Suffering from Poor Economic Climate
On the heels of a modest uptick in December, the Architecture Billings Index dropped to a historic low level in January, according to the American Institute of Architects.
An economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending. AIA reported the January ABI rating was 33.3, down from the 34.1 mark in December (any score above 50 indicates an increase in billings). The inquiries for new projects score was 43.5.
Every January the AIA research department uses a formula from the Department of Commerce that re-estimates ABI data based on seasonal factors resulting in a recalibration of recent figures.
“Now that the stimulus bill has passed and includes funding for construction projects, as well as for municipalities to raise bonds, business conditions could improve,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “That said, until we can get a clearer sense of credit lines being made available by banks, it will be hard to gauge when a lot of projects that have been put on hold can get back online.”
Key January ABI highlights include these:
• Regional averages: West (38.3), Midwest (34.6), South (34.4), Northeast (29.8),
• Sector index breakdown: mixed practice (39.6), institutional (37.1), commercial / industrial (33.8), multi-family residential (29.5).
• Project inquiries index: 43.5.
Hero Contest Enters the Final Lap
LENOX, a tool manufacturer headquartered in East Longmeadow, Mass., announces the top 10 finalists in the LENOX Extra Mile Hero Contest.
In 2008, LENOX officially kicked off the LENOX Extra Mile Hero Program with NASCAR driver Jeff Burton, driver of the No. 31 LENOX Industrial Tools RCR Chevrolet, by asking customers to submit stories of people they considered heroes; users and suppliers of industrial tools who go the extra mile for their community. A professional and VIP judging panel read through more than 600 nominations before selecting the 10 finalists. Each of the 10 finalists won $3,100 with a matching gift going to their charity of choice.
The next phase of the contest, “America Votes,” is now live. America can vote on which of the finalists they think will make the best LENOX Extra Mile Hero by going to www.lenoxhero.com to cast their vote. The finalist who receives the most votes will not only carry the honor of being the LENOX Extra Mile Hero, but they also win the Grand Prize of $31,000 as well as an additional $31,000 to be donated to their charity of choice. Voting runs through April 30, 2009.
But that’s not all! If Burton wins the LENOX Industrial Tools 301 NASCAR Sprint Cup Series race scheduled for June 28, 2009, LENOX will increase the grand prize to $1 million for the winner to split equally with their charity of choice! The Grand Prize winner will be announced at the 2009 LENOX Industrial Tools 301 at New Hampshire Motor Speedway.
To read about the nominations and to vote, go to www.lenoxhero.com.
RIDGID Announces Its Second Annual Video Contest
RIDGID®’s second annual video contest challenges contestants to creatively show the RIDGID logo in their videos. The winners will be announced on Sept. 11, 2009, at the RIDGID Roundup Customer Event at the company headquarters in Elyria, Ohio.
The RIDGID “Luck of the Draw” contest runs from February 16, 2009 to July 31, 2009. RIDGID tool users are invited to record and post an original one- to four-minute video that features the RIDGID logo and two of three mystery elements that will be given to contestants upon registering through the Web site (www.RIDGIDvideo.com).
RIDGID will choose five finalist videos, which will be posted on the RIDGID Web site for voting. Videos will be judged based on persuasiveness, creativity and entertainment value. Five finalists will receive an all-expense paid trip to attend the RIDGID Roundup Customer Event, where the winner will be announced. The grand prize winner will receive $2,500 in RIDGID tools of their choosing.
The RIDGID Roundup customer event is a two-day event that includes social events, product training, open discussions on industry topics, tool-related competitive games, a tour of the RIDGID headquarters and manufacturing facility and a chance to meet and interact with RIDGID employees and executive staff.
“The contest is a fun way for RIDGID tool users to express themselves creatively while showing their interest in RIDGID,” said Steve Dyer, director of marketing communications. “We are looking forward to seeing what the contestants will come up with this year. Also the video contest adds an element of excitement to the RIDGID Roundup customer event.”
For the official contest rules and to register for the “Luck of the Draw” video contest, visit www.RIDGIDvideo.com and click on the video contest link.
People & Companies In the News
Structus Building Technologies, Bend, Ore., has been named one of the top companies to work for in Oregon by Oregon Business Magazine. The magazine surveyed more than 30,000 employees* across the state to rank Structus 20th among medium sized companies (50-249 employees).
The U.S. Environmental Protection Agency has named Saint-Gobain, Valley forge, Pa., as a 2009 ENERGY STAR Partner of the Year for outstanding energy management and reductions in greenhouse gas emissions. The company was one of five new winners in the competition’s “energy management” category for industrial companies. No other manufacturer of glass containers or fiber glass insulation has ever received the Partner of the Year award.
Through a range of energy-awareness programs, key process improvements, and implementation of superior energy management practices in 2008, Saint-Gobain businesses in North America were able to save enough energy to make nearly 700 million glass bottles or enough fiber glass insulation for more than 160,000 homes. The company’s energy-use reduction equated to a reduction in carbon dioxide emissions released to the atmosphere of nearly 70,000 tons last year.
ParexLahabra, Anaheim, Calif., has named Robert Dickson the technical services director. Dickson takes reign of the position previously held by Tom Robertson as Robertson accepts a promotion to International for ParexGroup, ParexLahabra’s parent company. Dickson will be responsible for the management of the technical services group as well as the color department.
Armstrong World Industries, Inc., Lancaster, Pa., has announced that William C. Rodruan will serve as interim chief financial officer starting April 1 when F. Nicholas Grasberger assumes his new role as executive vice president and chief executive officer of Armstrong Building Products. Grasberger replaces Stephen J. Senkowski who is retiring. A search is under way for Grasberger’s successor.
Rodruan has served Armstrong for 33 years in leadership positions throughout the company, most recently as vice president, finance, of Armstrong Flooring Products Americas.
