A number of companies can coast on recession-era fixes, which leave them better capitalized for this (possible) downturn than 2007’s leverage-fest, but the underlying fundamentals do not suggest that we are in a thriving economy. All of the market indicators from GDP to employment data, hint that we, as a whole, are not doing well.
But let’s focus on a small piece of this and try to get some things under control. Let’s look at construction unemployment, which has fallen over the last few months, but has dropped to a still whopping 13.6% in July, according to the Associated General Contractors of America.
Ask hoteliers--and I have--and they are loathe to build more hotels just as the market rates are beginning to grow. Cities that had limited construction leading into the downturn, Boston as possibly the best example, weathered the recession very well and have become a leading market mentioned in the same breath as New York City and Washington, DC. So, construction is not popular among landlords. Ask Las Vegas if it would be stoked for new construction. Your shrieks are noted.
But not having construction, I will posit, is killing a large portion of our economy and its growth. So, here’s my simple plan, and it is not a new one, but something that strikes me as sensible.
Public-Private Partnerships for infrastructure and redevelopment. We’re talking private money and planning with government backing, which provide updates, patches and development of new infrastructure. Our country is falling into second and third-world levels of infrastructure and the government is paralytic with a paroxysm of self-interest. It cannot spend more, even to help itself. But private funds, focused and backed by a government that wants its infrastructure repaired, but refuses to pay for it, would help employment levels, raise property values and restore roadways and public works. The money generated from paying workers could rejuvenate out of work blue-collar towns. It would be downright patriotic.
StreetWorks’ land disposition agreement for the Quincy Center Project is a great example of a development group taking the initiative and reworking the order of a traditional PPP. The result will be a revitalized town and increased employment with some infrastructure redevelopment. Hudson Yards in New York City is creating its own infrastructure solutions moving attempting to move itself off the city’s grid and using water retention and reuse to stop sewer overflow issues.
These are small scale models to how private and public mixtures can regenerate construction across the country without endangering a very fragile rate-growth trend. Infrastructure development is a part of numerous package deals in India and has been noted as a major concern with trying to build in China (although, it should be noted that land ownership has been expressed as a huge concern as well). We do not want the US to fall backward into a state where development is no longer worth it because the surrounding area is in need of too dire a reworking. Let’s do this now while it’s still manageable.
And if it were me, I’d focus on recently obstructionist states to make them choose whether to stand on irrational principle or choose to help their states and their people. Just don’t let them choose their own bridge projects.
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