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The Importance of Infrastructure to Commercial Real Estate

Posted by Jeff Hopper on Nov 28, 2016 9:51:43 AM

Infrastructure entails a vast number of systems and facilities that impacts our lives, but is given little consideration and often taken for granted. Infrastructure, among other things, gets us to work, pipes water to our homes and conveys freight across the country. Most would agree that infrastructure has a huge impact on how our economy operates, therefore is isn’t surprising that infrastructure, or lack of infrastructure, can have a dramatic effect on the surrounding real estate. A report released this summer by commercial real estate firm Transwestern entitled “Cranes & Lanes, the link between infrastructure and commercial real estate” confirms the importance of infrastructure to commercial real estate.

Thanks to recent high profile infrastructure failures involving bridge collapses, transit system shutdowns, and troubled water systems, there is general agreement that infrastructure in the U.S. has been under funded. The American Society of Civil Engineers estimates that the United States needs to spend $3.6 trillion by 2020 to bring the country’s infrastructure back to adequate levels. Despite this neglect, some cities have embarked on infrastructure projects of their own, recognizing that in order to stay competitive and generate economic development, their infrastructure must keep up.

Several of the projects cited revolve around transit, such as the Modernization Project at Chicago’s O’Hare Airport or the Washington DC Silver Metro Line to Dulles Airport both of which Transwestern sees as a “catalyst for economic growth and job creation.” But there are a number of nonresidential building projects that are also expected to spearhead ancillary development and construction. Examples cited include two projects in Atlanta GA and one in Houston TX.

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Atlanta GA:

I-285/ GA 400 Interchange. Handling over 400,000 vehicles per day, this is Atlanta’s most congested intersection. Located at the heart of the Central Perimeter submarket this interchange is about to undergo a significant reconfiguration at a cost of $1.1 billion. The surrounding area is dominated by Class A office buildings that house several Fortune 500 firms, as well as a very large medical office and hospital district.

The new Atlanta Braves stadium. Driven by the desire to relocate and control the environment around its field the Atlanta Braves are building a new stadium near the Cumberland/Galleria submarket in northeast Atlanta. The new stadium development will also include a $400 million shopping, dining and entertainment district, as well as a new Omni Hotel and a 300,000-square-foot office building that will be occupied by Comcast. Although this project is expected to have a minimal effect on the office market in suburban Atlanta, a significant effect on the retail market is anticipated bringing a new urban atmosphere to one of Atlanta’s oldest suburban enclaves.

Houston TX:

The Grand Parkway. With a population of almost 7 million, Houston TX has outgrown its first two beltways and is expanding the route of Grand Parkway, which eventually will be a 180-mile beltway encircling Houston. The initial phase opened up in 1994 with completion expected in 2016. The Grand Parkway will link the Energy Corridor submarket on the west side of Houston with The Woodlands in the north and will eventually affect multiple commercial property types throughout Greater Houston.

In conclusion, infrastructure spending positiviely impacts commercial real estate, which in turn will lead to greater construction opportunities. Finding these opprotunities is alway a challenge for contractors. The LDI Line, a FREE plan room service offered by LDI Reproprinting is a great way for contractors to view current bid opprtunities being offered throughout the southeast. Digital and hard copy plans of any LDI Line project can be ordered from any LDI loaction.   

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