The Counselors of Real Estate, an 1,100-member global real estate advisory organization, just released its semi-annual report about the current and emerging issues expected to have the most significant impact on real estate. Ten issues have been identified and we will address them by significance as presented in the survey.
The number one challenge that CREs around the world identified was infrastructure repair and modernization, including roads, bridges, mass transit systems, railways, airports, the power grid, water and stormwater systems, and levees. This is a global challenge, and the U.S. is lagging behind other nations in its efforts to address this.
Investing in infrastructure repair is unsexy. It’s a problem that rarely feels urgent, but touches every aspect of the economy, says Jeff Levine, SIOR, CRE, and senior vice president of APEX Commercial Group.
“In markets like ours we often do not experience some of the issues affecting major markets and bigger cities, but after giving it considerable thought, I agree with the assessment of my colleagues around the globe — this has become our number one challenge,” Levine says. “I believe we are already seeing the impact of lack of infrastructure investment locally.”
All cities can get caught in a bind when they fall behind on infrastructure investments — not just the second- or third-tier markets like Dayton. They need additional revenue from a growing business sector to tackle infrastructure updates, but without infrastructure investment, the business sector can’t grow.
When a region invests in infrastructure selectively, it influences the decisions businesses make. For example, in the Dayton region, new developments like Austin Landing offer some of the best infrastructure as well as the best access to I-75, and they have attracted many businesses away from existing developments. And while you don’t always hear “close to the highway” as the number one priority on someone’s real estate wishlist, their actions prove its importance.
“Access to the highway, access to the airports — these things drive decisions,” Levine says. “In a community like ours, access is more important than walkability.”
Levine says he has noticed that many cities are attempting to deal with their aging infrastructure by focusing investment and developer incentives on virgin land, where it’s cheaper to start from scratch to build modern roads, sewers and electrical lines than it is to rebuild infrastructure inside of cities. That strategy has worked well to capture growth in the warehouse and fulfillment center sector, but it won’t serve businesses who need to attract young, highly educated workers who want to live in vibrant cities.
“If we’re to see a resurgence in business growth in the City of Dayton, I think it requires an infrastructure investment in the inner city,” Levine says.