(Crystal Proenza is associate editor of Real Estate Florida.)
FORT LAUDERDALE, FL-A deal worth $1.8 billion has been struck between the US Department of Transportation, a Spanish developer and a dozen international banks to fund infrastructure improvements along Interstate 595 in Broward County. The financing, which is the first public-private partnership based on availability payments to close in the US, will be used to extend a section of the highway, improve a Turnpike Interchange with Interstates 75 and 95, add express lanes and implement a bus service within the corridor, according to law firm Simpson Thacher, which represented the lending banks.
Local experts say the I-595 Corridor Roadway Improvements Project is a positive for South Florida's commercial real estate sector, which would enjoy short-term and long-term benefits as construction takes place over the next five years and after. With an expected 30,000 support jobs and 8,000 construction jobs generated, the office market especially could see a boost.
"The key to the effect on the commercial real estate business in deals like this lies in the details," says Stephen Nostrand, executive vice president with Coral Gables-based Colliers Abood Wood-Fay. "The details of the individual deals frame the actual impact of the project on our business," he explains, referencing the placement of the created jobs and noting that some foreign companies bring a sizeable workforce from their own countries. No doubt though, he adds, the infrastructure work is a positive for jobs, office space, retail consumption and housing.
"Administrative jobs take five people per thousand feet of building or so, at which this would require plus or minus six million square feet of space, assuming they are all employed at the same time and within this region," says Tom Capocefalo, managing director of Studley's South Florida office. The development would most likely have an effect commercial occupancy in the suburban markets, he explains, because in many instances architects, engineers, designers and legal and accounting services would be supported from that area.
In the long run, the infrastructure improvement provides more access to western communities, such as Plantation, Miramar and Weston, which means more people will live there, says Capocefalo. "Where there's more people, commercial enterprise tends to follow the residential population."
Construction on the project is slated to begin this summer and last five years, during which some funding will be covered by toll operations along I-595, reports Simpson Thacher. A large sum of the financing, a total of $781 million in senior loans, will be provided by 12 banks located in Europe and Australia. Those banks include Banco Santander, Sabadell, Banco Popular Espanol, BBVA, Caja Madrid, Calxnova, La Caixa, Société Générale, Caylon, Dexia, WestLB and the National Bank of Australia. Another $609 million subordinated loan has been supplied by the USDOT, and $210 million of equity is being funded by Spanish infrastructure developer ACS Dragados.
"People have been waiting for a US infrastructure boom for many years--but expectations have consistently exceeded reality," said David Lieberman, a Simpson Thacher corporate partner, in a release. "Our hope is that this financing, bringing together a group of international participants in a deal that will improve such a critical and well-traveled piece of highway, can be a roadmap for large-scale infrastructure investments going forward."
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