Congress is once again racing towards a cliff as they debate funding for vital transportation and infrastructure projects. News that the economy shrank during the first quarter of 2015 should be a wake-up call for Congress.
If Congress fails to act by July 31, infrastructure and transportation projects across the country will shut down during the height of the construction season, resulting in significant damage to an already fragile economy.
We need a new national strategy that incorporates innovative funding solutions to enhance and improve our nation’s infrastructure. These kinds of transportation and infrastructure projects are the lifeblood of commercial real estate.
It is good for the economy, too. Getting to work on our roads and bridges could spur exponential growth in the commercial real estate sector. In 2014, the commercial real estate industry supported 508,713 jobs in the architecture, engineering, marketing, legal, management, and administration fields, resulting in a $75.33 billion contribution to the economy.
The commercial real estate industry is integral to our everyday lives. It houses the space where Americans live, work and play. The success of commercial real estate is directly related to connectivity. From a development standpoint it takes certainty in the marketplace to make these kinds of large-scale investment decisions. Stability in transportation infrastructure investment from the federal government is one of those factors. Before decisions are made to develop property, the means to get to the finished product –roads bridges, highways and port systems – must be secured.
Our crumbling infrastructure is largely a result of a depleted Highway Trust Fund. Inflation and vehicle fuel efficiency have all slowly eroded the trust fund and created a $53 billion dollar deficit over the past seven years.
Unfortunately, members of Congress dodged the issue recently by passing a short-term bill instead of focusing on a long-term solution. This puts projects of significance in jeopardy. That’s because long-term projects require more time and dedicated funding before they will even get started.
Recent statistics show that there is plenty of work to be done. According to the American Association of State Highway and Transportation Officials, 54 percent of America’s major roads are rated poor or mediocre, and one in four bridges needs significant repair or can’t handle today’s traffic. Additionally, the National Surface Transportation Policy and Revenue Study Commission recommended that America needed to spend at least $255 billion per year over the next half-century to keep our transportation system in good repair and make the needed upgrades.
A short-term transportation bill will not do enough to unlock the full potential of the commercial real estate industry or fix our outdated infrastructure. Some projects may get through this year but the most important investment decisions will be stuck in line, as investors and businesses wait idly for Congress to act. The success of the U.S. economy depends heavily on commercial real estate projects and commercial real estate depends on a consistent national strategy for infrastructure funding.
As members of Congress debate ways to jump-start the economy, they should look no further than providing our nation’s infrastructure with the funding it needs. Now is the time for Congress to give a green light to the economy by passing a comprehensive national strategy for transportation infrastructure funding.
This article is re-published from The Hill, June 25, 2015.
Thomas J. Bisacquino is NAIOP President and CEO.