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Monday AM January 14th, 2008

Houston apartment industry upbeat about 2008…American Airlines pilots push for federal mediator to help in contract negotiations…FutureGen project won by Illinois may run into funding problems… Participants at an industry trends event held by the Houston Apartment Association are upbeat about 2008. Bruce McClenny is with Apartment Data Services. “The Inner Loop is always the […]

Houston apartment industry upbeat about 2008…American Airlines pilots push for federal mediator to help in contract negotiations…FutureGen project won by Illinois may run into funding problems…

Participants at an industry trends event held by the Houston Apartment Association are upbeat about 2008. Bruce McClenny is with Apartment Data Services.

“The Inner Loop is always the strongest market, and it’s proven so once again, and so with that come, you know, the biggest rental increases because it ahs the most demand and the availability at this point, has been, you know, somewhat low. But that may change in 2008 because there’s a lot of new units in the Inner Loop areas.”

McClenny’s group keeps track of apartment construction in the Houston area.

“We have about 18,000 units under construction right now and another 19,000 that are proposed, so you know those numbers in terms of historical perspective are a little bit high. We have to go back to like 1998, 99â€â€those two years together, we had about 30,000 units come on line.”

Keith Oden heads Camden Property Trust.

“Most people believe that the rental rate increase will be in the three to four percent range for 2008, in line with what it was in 2007. There was a fair amount of conversation regarding the demand and supply balance in what we’re looking at in 2008. I guess on the demand side, most people believe that we’ll see somewhere in the 50- to 60,000 additional jobs created in the Houston economy in 2008. Viewed from a national perspective, that’s gonna be probably one of the better results that we’ll see in the major metropolitan areas.”

Oden says looking at the health of the local economy helps in forecasting rental demand.

“Job growth and employment growth and population growth are the best correlated factors with multifamily demand, and they have been historically. And we actually have a metric that we use that’s fairly accurate over a long period of time, looked at over enough markets, and it’s pretty simple to keep up with–it’s for every five additional jobs that get created, it creates a net of one rental unit demand.”

Apartment Data Services says the subprime mortgage crisis will continue as a factor in 2008 rental statistics.

The pilots’ union at American Airlines is pushing for a federal mediator to help in contract negotiations. The Allied Pilots Association and Fort Worth-based American have been talking for more than a year but produced few signs of progress. Union officials asked American to join in its request for help from the National Mediation Board. Pilots at American are working under a 2003 contract that included pay cuts to help the company avoid bankruptcy. The contract can be updated in May. The union asked last summer for pay increases of about 50 percent, which leaders said would restore pilots’ purchasing power to 1992 levels. Labor negotiators at American have indicated that the request was unrealistic because of high fuel prices and tougher competition.

The owners of a biodiesel plant in Galveston plan to spend $15 million to upgrade the facility after Chevron left the project last year, according to the Houston Chronicle. Galveston Bay Biodiesel says $2.2 million of the money will also help settle legal claims against it after Chevron’s departure. Galveston Bay Biodiesel says it will continue pursuing a lawsuit against Chevron. The new investment in the plant will boost production to 40 million gallons per year by this summer.

A Republican Congressman from Illinois worries that Energy Department plans to scale back a next-generation, low-pollution power plant could scuttle the deal. The power and coal companies developing FutureGen last month announced plans to build it in the central Illinois community of Mattoon. But the Energy Department is providing most of the money and worries about the cost, which is now approaching $2 billion. Congressman John Shimkus says he believes the Energy Department is mulling downsizing the project and spreading the technology to several sites around the country. Shimkus says the Energy Department has made it clear it’ll walk if the project doesn’t get retooled, and that he’s unsure anyone can stop them. The Energy Department isn’t discussing the matter publicly. Mattoon was chosen over another Illinois site and two in Texas for the FutureGen project. The Texas sites were near Odessa and Jewett.

Gamestop had a great holiday season and raised its profit outlook for the fourth quarter. But that wasn’t good enough for investors, who bid down the video game retailer’s shares. At least one analyst downgraded Gamestop shares, saying they might be overpriced. Gamestop was helped in December by strong sales of “Guitar Hero III,” “Assassin’s Creed” and other hot games. The company says sales rose nearly 35 percent and same-store sales at locations open at least a year jumped 20 percent in the nine weeks that ended last Friday. Those results led Gamestop to raise its predictions for sales and profits in the fourth quarter and all of 2007.

Consumer electronics retailing giant Best Buy says its comparable-store sales rose 1.5 percent in December on strong sales of video games and notebook computers. The results were not as good as last year but far better than its rival Circuit City stores. Best Buy is leaving its profit guidance unchanged. Like other retailers, Best Buy’s December was hurt by a calendar shift that put an extra week of post-Thanksgiving shopping in November. Adjusting for that shift, Best Buy said sales at stores open at least 14 months would have risen three percent in December. Circuit City said same-store sales fell 11.4 percent in December. Best Buy’s results were also helped by strong growth of sales in Canada and China.

A partnership of companies won an $800 million a year government contract to become the new manager and operator of the Savannah River site in South Carolina. Irving-based Fluor leads the partnership known as Savannah River Nuclear Solutions. The five-year contract involves environmental cleanup at the site and research at the Savannah River National Laboratory. The partnership also will work on storing and processing plutonium and uranium at the cold war-era nuclear weapons complex. Washington Savannah River Company had been the primary contractor at the site since 1989 when it bought Westinghouse Government Services. Washington also was in the running for the work. Transition to the new contractor will begin January 24th and will be completed in three months.

Congressional orders for the closure and realignment of military bases is cause for panic in most military towns. But for San Antonio, the orders will mean thousands of new jobs and billions of dollars in construction over the next three years. San Antonio Mayor Phil Hardberger says the base closure and realignment process “has really been a good thing for San Antonio.” Since before the Civil War, San Antonio has historically had a large military presence. But the fifth and latest round of BRAC moves will move nearly 5,000 extra military jobs to the Alamo City. The moves, to be completed by 2011, will include an estimated $2.1 billion in renovation and construction at Army and Air Force installations in and around the Alamo City. The realignment will most affect the 131-year-old Fort Sam Houston. The base already is headquarters for the Army’s Medical Command. The realignment will make it the center for all Defense Department medical training and research. Fort Sam will also become the headquarters for the command that oversees all Army post infrastructure worldwide.

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