Commercial building loans on a roll
Photo credit: © NOSKOWSKI


Commercial building loans and their supporting activity are edging toward pre-recession levels. As of mid-year 2013, U.S. banks had issued just short of $1 trillion dollars in commercial real-estate loans, up almost 4% from a year earlier, according to official sources.

Stretching from office buildings to shopping centers, warehouses and apartment buildings, such lending to developers and property owners is on an accelerated rebound because of impressively rising real-estate values and greatly improved credit quality. Also adding to this positive equation is the high esteem in which America’s real-estate property is held by foreign investors sitting on top of an all-time high accumulation of cash liquidity.

What differentiates the current surge in the commercial sector from the “bubbles” that came before the recession in the late 1990s and briefly after the turn of the century? This is based on actual demand and solid credit rather than speculation.

What makes this turn of events particularly impressive is that commercial real estate is becoming a significant driver of loan growth. After a 25% plunge in loans-generated growth as late as 2011, the current rebound is unexpected in the breadth of its scope and the variety of commercial real estate covered.

Although the switch from single-family homes to a massive surge of rental apartment buildings provided the initial post-recession liftoff, the current commercial growth is engendered by the genesis of office buildings, retail complexes and industrial properties. The expansion of leased and monthly rented residential apartment high-rises in major cities is critical too.

This switch from long-term home ownership to a more flexible method of shelter for the bulk of America’s fast-growing population appears to be a long-term shift. This is based on the urgency of nationwide employment mobility and a widespread belief that owning a home is no longer considered the sure-fire asset it had been for many decades preceding the financial breakdown of 2008-2011. “Flipping” with almost automatic price increase on sale appears to belong to the past.

Just as important has been the reaction of both major national and regional banks, which are more secure in extending credit to developers and business owners. This is especially graphic during the current regulation transition, when both the Federal Reserve and government agencies have tightened their grips over the greater flexibility and government policies, which facilitated and encouraged much easier lending practices in the past.

At a time when America continues to be faced with domestic dysfunction and foreign policy challenges, this unexpected awakening of the almost moribund construction arena is a most hopeful sign for a great national rebound in the foreseeable future.


Solar projects lead renewables

Despite the controversies surrounding such government-subsidized bankruptcies as Solyndra, the influx of cut-rate Chinese solar panels and the concerns of growing competition from utilities, solar is approaching its greatest power generation capability ever in the United States.

Although the proportionate results are concentrated heavily in California, North Carolina and Massachusetts, solar usage expansion is assured of substantial growth in most of the country for the following reasons:

Declining solar PV panel prices, favorable legislation such as renewable portfolio standards and fiscal investment tax credits continue to drive solar renewable development by utilities and merchant generators. Also, the retirement of older fossil-fuel and nuclear units creates demand for a new generation of solar power that greatly enhances this type of renewable energy.

State legislation has been critical for utility-scale solar growth. California, which has, by far, the most planned solar capacity, recently passed two bills encouraging renewables in general, but particularly solar development. Senate Bill 43 allows ratepayers to purchase renewable generation from 600 milliwatts of shared installation. Assembly Bill 327 gives utility regulators the ability to raise the “rate” requirements as high as they choose. This removes the aggregate capacity and individual project size limits on net metering.

With the second half of 2013 indicating substantially new records for residential, commercial and industrial installations now in use, the spread to most of the country is inevitable in the years ahead. Although utilities’ solar mandate usage and federal/state tax credits will continue to provide cost-efficiency usage in ever-larger quantities throughout the United States, the effectiveness of technological advances also will play a part in the increasing utilization of solar energy going forward.

 With the rather dour climate of Germany setting the example, much of the expected breakthroughs enhancing future utilization of solar energy are bound to add additional opportunities for enhancement of America’s total future energy capacity. Together with the ever-brighter future of global natural gas usage for transportation and the electric car phenomenon of Tesla Motors, the United States is well on its way to becoming the world’s energy megacenter, an objective not even dreamed of a short 13 years ago.