Business Management
Jul 20, 2009
By: Barbra Murray, Contributing Editor
Upgrading the country's severely dilapidated infrastructure is among the White House's very top priorities, with the administration having allotted $150 billion in funding from the American Recovery and Reinvestment Act for improvements. Specifically, $40 billion will be directed toward the safeguarding of roads, bridges, dams, ports, rail and water systems over a two-year period--a move that is key to the future success of the commercial real estate industry, according to construction lawyer Barry B. LePatner of New York City-based law firm LePatner & Associates L.L.P. LePatner, author of 2007's Broken Buildings, Busted Budgets, spoke to CPN about the impact that the infrastructure improvement segment of the government's stimulus bill will have on the commercial real estate industry.
CPN: What is your progress report on the impact the stimulus package has had on the nation's infrastructure so far?
LePatner: The administration's commitment to infrastructure isn't addressing infrastructure, per se, it's about jobs. The larger infrastructure issues---rails, bridges, tunnels--all remain to be addressed. We're not on the road to correcting infrastructure; we are on the road to correcting distress to our economic situation. What is yet to come is the trillions that will be needed to update our roads and bridges. The American Society of Civil Engineers' report card on infrastructure gives the country a grade of D and notes that we still need an estimated $2.2 trillion to bring our infrastructure up to acceptable standards from the deteriorated condition it has fallen into.
CPN: Given the hefty price tag attached to the comprehensive overhaul, is it necessary to tackle the issue in its entirety immediately?
LePatner: Infrastructure is central to the issue of how we're going to grow our nation, so it's got to be something that is planned and financed now if we're going to be ready in 5 years, 10 years. We're going to have to commit the funds now; we can't look at this as a long-term problem.
CPN: And how does the fortification of the nation's infrastructure relate to the commercial real estate industry?
LePatner: The strength of our commercial real estate world is a function of amassing people who drive demand, and that is all reliant on a functioning transportation system. Today when we talk about our nation's cities, the 100 largest metro areas seem to be in distress because the lack of efficient transportation systems to move people around is causing congestion. If you have congested cities bogged down by transportation--bridges that have to have lanes closed, clogged highways, etcetera--all of this is an inhibitor of growth in the commercial real estate area. Once we understand the importance of rectifying this problem, commercial real estate will have more opportunities to be profitable.
CPN: So, proper infrastructure and the success of commercial real estate go hand in hand?
LePatner: If you take the core of a city and it's bogged down by traffic, then there's less incentive for the commercial real estate industry to build new properties because you can't move people around and get them to buildings. You need to move them efficiently in and out of the city, so you can build outside the city. Right now, you see the renaissance of people moving back downtown because they're tired of that commute.
CPN: What do you make of the trend of developing mixed-use properties that emerged prior to the commercial real estate's meltdown? Is mixed-use still the future of the industry, once the credit markets defrost and the economy rebounds?
LePatner: Mixed-use is not anything more than the recognition that people no longer want to commute.
CPN: Earlier, we touched on the subject of the opportunities infrastructure rehabilitation can present for commercial real estate; please elaborate on this premise.
LePatner: For example, we're going to see more airports being built around more light rail--all of that will open more opportunities for commercial real estate. But we don't want these new systems to be immobilized; we don't want to see them going nowhere because the roads to and from those new facilities can't handle it. Where we stand with the nation's outlook, despite the downturn in the economy, is over the next 25 years, in terms of population growth, there will be a shifting of the population to the south and southeast, which will lead us to a $25 trillion construction boom. We're going to need office, hotels, airports, roads; we're going to see schools and new residential areas to meet those needs. That's the reality; we're going to grow and enhance our building environment considerably over the next 25 years.
CPN: So, where do we stand right now with the opportunities for growth that infrastructure upgrades can provide the commercial real estate industry?
LePatner: Actual infrastructure repair will come after we stabilize our economy. We've got to get back to restoring the infrastructure of our nation--our roads are our backbone.
By: Barbra Murray, Contributing Editor
Upgrading the country's severely dilapidated infrastructure is among the White House's very top priorities, with the administration having allotted $150 billion in funding from the American Recovery and Reinvestment Act for improvements. Specifically, $40 billion will be directed toward the safeguarding of roads, bridges, dams, ports, rail and water systems over a two-year period--a move that is key to the future success of the commercial real estate industry, according to construction lawyer Barry B. LePatner of New York City-based law firm LePatner & Associates L.L.P. LePatner, author of 2007's Broken Buildings, Busted Budgets, spoke to CPN about the impact that the infrastructure improvement segment of the government's stimulus bill will have on the commercial real estate industry.
CPN: What is your progress report on the impact the stimulus package has had on the nation's infrastructure so far?
LePatner: The administration's commitment to infrastructure isn't addressing infrastructure, per se, it's about jobs. The larger infrastructure issues---rails, bridges, tunnels--all remain to be addressed. We're not on the road to correcting infrastructure; we are on the road to correcting distress to our economic situation. What is yet to come is the trillions that will be needed to update our roads and bridges. The American Society of Civil Engineers' report card on infrastructure gives the country a grade of D and notes that we still need an estimated $2.2 trillion to bring our infrastructure up to acceptable standards from the deteriorated condition it has fallen into.
CPN: Given the hefty price tag attached to the comprehensive overhaul, is it necessary to tackle the issue in its entirety immediately?
LePatner: Infrastructure is central to the issue of how we're going to grow our nation, so it's got to be something that is planned and financed now if we're going to be ready in 5 years, 10 years. We're going to have to commit the funds now; we can't look at this as a long-term problem.
CPN: And how does the fortification of the nation's infrastructure relate to the commercial real estate industry?
LePatner: The strength of our commercial real estate world is a function of amassing people who drive demand, and that is all reliant on a functioning transportation system. Today when we talk about our nation's cities, the 100 largest metro areas seem to be in distress because the lack of efficient transportation systems to move people around is causing congestion. If you have congested cities bogged down by transportation--bridges that have to have lanes closed, clogged highways, etcetera--all of this is an inhibitor of growth in the commercial real estate area. Once we understand the importance of rectifying this problem, commercial real estate will have more opportunities to be profitable.
CPN: So, proper infrastructure and the success of commercial real estate go hand in hand?
LePatner: If you take the core of a city and it's bogged down by traffic, then there's less incentive for the commercial real estate industry to build new properties because you can't move people around and get them to buildings. You need to move them efficiently in and out of the city, so you can build outside the city. Right now, you see the renaissance of people moving back downtown because they're tired of that commute.
CPN: What do you make of the trend of developing mixed-use properties that emerged prior to the commercial real estate's meltdown? Is mixed-use still the future of the industry, once the credit markets defrost and the economy rebounds?
LePatner: Mixed-use is not anything more than the recognition that people no longer want to commute.
CPN: Earlier, we touched on the subject of the opportunities infrastructure rehabilitation can present for commercial real estate; please elaborate on this premise.
LePatner: For example, we're going to see more airports being built around more light rail--all of that will open more opportunities for commercial real estate. But we don't want these new systems to be immobilized; we don't want to see them going nowhere because the roads to and from those new facilities can't handle it. Where we stand with the nation's outlook, despite the downturn in the economy, is over the next 25 years, in terms of population growth, there will be a shifting of the population to the south and southeast, which will lead us to a $25 trillion construction boom. We're going to need office, hotels, airports, roads; we're going to see schools and new residential areas to meet those needs. That's the reality; we're going to grow and enhance our building environment considerably over the next 25 years.
CPN: So, where do we stand right now with the opportunities for growth that infrastructure upgrades can provide the commercial real estate industry?
LePatner: Actual infrastructure repair will come after we stabilize our economy. We've got to get back to restoring the infrastructure of our nation--our roads are our backbone.
Recent Headlines
Subscribe to this blog's feed
