Industrial PVF

Industrial Hotspots: 2008 Industrial Building Seen Rising 21%

According to Industrial Info Resources (www.industrialinfo.com), there are 4,810 active North American industrial projects totaling more than $382 billion scheduled to begin construction in 2008. That total investment value (TIV) has increased 21% when compared with similar numbers taken for 2007. At the beginning of 2007, there were $314 billion worth of projects scheduled to begin construction in 2007. By September 2007, that number had decreased to $266 billion because of project cancellations or delays, representing 15% project fallout.

Geographically, the market regions receiving the majority of the 2008 project expenditures are western Canada with almost $58 billion, the Great Lakes with $52 billion, the Southwest with $48 billion and the West Coast with $38 billion. Western Canada’s Alberta oil sands development continues to drive massive investment in new and expanding mines, steam-assisted gravity drainage facilities, upgraders, refineries, pipelines, cogeneration plants and terminals, as well as infrastructure and commercial projects to support this development.

The largest project is the $6 billion sturgeon upgrader being planned by Petro-Canada in Edmonton, Alberta. This project could begin construction in late 2008.

Industrial Info reports that in some cases contractors are turning away business or are not bidding on new jobs in order to focus on projects that offer the largest return for the investment. A nationwide skilled labor shortage, equipment availability issues, and engineering and construction cost escalation are constraints that could increase the amount of project fallout in 2008.

Some other industrial hotspots include:

Southeast: Industrial Info Resources is tracking 206 active capital and maintenance projects with total TIV of $11.4 billion in the Southeast market region, composed of Alabama, Georgia, Mississippi, Tennessee and Florida, that are scheduled to start construction in the fourth quarter of 2007. Here is a breakdown of project counts and expenditures.

Alabama:

Florida:

Georgia:

Mississippi:

Tennessee:

New England: Encompassing Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, the region is forecast to begin construction on 40 capital/MRO (maintenance) projects carrying a total investment value (TIV) of $1.4 billion, an increase of 10% over the fourth quarter of 2006.

Rocky Mountain Region: This region spanning Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming has experienced a positive trend over the past two years in project spending and plant construction. Planned project spending for the Rocky Mountain region has increased 50% compared with 2007 figures. There are 352 projects totaling more than $37 billion scheduled to begin construction in 2008 compared with $24 billion in 2007 (based on Industrial Info’s monthly updated Project Spending Index). States not typically known for industrial construction activity, like Utah and Idaho, are lining up big projects. Utah leads all states in the region with 59 projects totaling $6.5 billion. Utah’s rise can be attributed to an influx of energy-related projects, including $3.7 billion for the power industry, mainly for coal-fired-related developments; a planned $500 million petroleum refinery project; and some large-scale oil and gas pipeline projects. Arizona is a close second to Utah with $6.2 billion, followed by New Mexico with $6.1 billion, Nevada with $5.1 billion, Wyoming with $4.9 billion, Colorado with $4.1 billion and Montana with $2.7 billion.

Harris County, TX: Driven by strong petrochemical plant construction activity along the Houston Ship Channel, industrial firms are planning more than $5 billion in project spending in Harris County, TX. Currently, 144 projects are planned to begin construction over the next 2-3 years in the county. Holding true to its oil and gas roots, about 60% of the future project spending in Harris County will be for downstream oil and gas industry projects, including refining and petrochemical expansions. In addition to the planned work, there is approximately $870 million worth of industrial projects under construction in Harris County, including a $100 million chlorine unit expansion for Bayer Corp. in Baytown, TX.

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