One
category of construction that has done well so far in 2007 is energy projects. The outlook appears
more mixed. On Wednesday, the American Wind Energy Association (www.awea.org) reported that it expects a record
amount of wind-generation capacity
to be completed this year. Texas leads in both previously and newly installed
“utility-sized” turbines (100 kilowatt or larger). New or under-construction
projects are found in 27 states, with concentrations in Minnesota, Iowa, North
Dakota, Washington and Oregon. But wind projects depend on a “production tax
credit,” which is due to expire on December 31. Congress and the President have
yet to agree on a package of tax “extenders,” including the credit. Ethanol plant construction may also
slow. The Wall Street Journal reported on November 1,
“a glut of ethanol suply-and a sharp drop in price-is reining in expansion.
Recently, proposed facitilites in Minnesota, South Dakota and Iowa have put
construction plans on hold….73 plants are under construction nationwide,
according to the Renewable Fuels Association in Washington. But dozens of other
planned projects are stalled…[In Nebraska,] 43 are stuck in planning stages….However,
Jeff Broin, chief executive of closely held Poet, the biggest U.S. ethanol
maker, with 21 plants, says the company will build plants at its traditional
steady pace.”
Senior loan officers at 52 domestic banks
and 20 foreign banking institutions reported a net tightening of lending standards on commercial real estate
loans and weaker demand in October compared to July, the Federal Reserve
said Nov. 5. “The net fraction of domestic banks that reported having tightened
their lending standards for commercial real estate loans over the past three
months increased notably, to 50%, relative to the July survey. The net fraction
of foreign institutions that reported tightening their lending standards on
such loans was, at about 40%, little changed compared with the July survey.
Regarding demand, approximately 35% of domestic and foreign institutions-up
from about 25% in the July survey-reported that demand for commercial real
estate loans had weakened over the survey period.” Charts in the report showed
the 50% share of domestic banks that reported tighter standards was the highest
since 1991, while the percentage reporting lower demand was similar to early
this year but far below 2003-mid 2006 levels.