Commercial real estate (CRE) firm BBG shared its thoughts about infrastructure project demand in 2024. In their article “Population Growth, Government Funding Driving Strong Infrastructure Project Demand in 2024,” BBG Vice President T.J. Smith and Right of Way Vice President Mark Sadler broke down the beneficiaries of these demands.
“Demand for infrastructure projects is expected to show continued strength in 2024, with the nation’s Sun Belt region leading the way for this asset class,” Smith and Sadler wrote. “Population growth is primarily driving work on improving roads, highways, bridges, rail lines, electrical transmission lines, oil and gas pipelines and water and sewerage systems.
“The biggest beneficiaries of infrastructure projects are the South and West, the country’s fastest-growing regions,” Smith and Sadler went on to say. “For example, Texas, one of the nation’s high-growth states, is planning to spend a record $100 billion over a 10-year period to maintain roadways, alleviate congestion and increase traffic safety.”
Another key factor boosting infrastructure projects Smith and Sadler pointed out is the passage of two pieces of federal legislation in recent years, the Bipartisan Infrastructure Law and the Inflation Reduction Act. The legislation approved hundreds of billions of dollars to fund essential infrastructure projects across the country.
Additionally, appraisers specializing in Right-of-Way (ROW) projects are urgently needed to meet surging demand for these construction projects. ROW appraisals help buyers and sellers reach fair and equitable values on properties and ensure that projects comply with building and zoning requirements.
“A significant portion of infrastructure projects requiring ROW appraisals include upgrading roads and highways, many of which have fallen into disrepair or in dire need of expansion resulting from an ever-increasing volume of traffic,” Smith and Sadler said.
Vehicles traveling U.S. roadways soared from 65 million vehicles in 1956 – the year legislation was passed to fund the country’s interstate highway system – to more than five times that number in 2019, a 324 percent increase, according to one industry statistic.
The company executives noted that ROW appraisals are also necessary to keep America’s energy and water infrastructure humming along. Like roadway projects, oil and gas companies and utilities need to acquire properties to meet population growth demands.
“ROW appraisal services for energy infrastructure projects range from building new oil and gas pipelines to sending clean energy (wind and solar) through transmission lines to help power cities and towns,” they said.
Infrastructure projects have largely averted the challenging market conditions faced by other CRE segments within the past couple of years, yet they still have their own set of challenges.
The BBG executives pointed out that cities and states experiencing COVID-related declines in tax revenue delayed some infrastructure projects. However, federal and state funding for highways and other projects blunted some of the pandemic’s impact on this work.
“Perhaps the greatest challenge facing the infrastructure building industry overall is a chronic shortage of land surveyors needed to delineate acquisition boundaries which, in turn, has resulted in delays on some projects,” Smith and Sadler wrote. “According to personnel recruiting firm GeoSearch, the number of surveyors is expected to grow only by 2 percent through 2030. A confluence of factors is attributed to the shortage including an aging workforce which has less than one-fifth of surveyors under 34 years old, a lack of interest in these field and qualified surveyors and increasing complexity of surveying technology.”
Smith and Sadler also shared that in some cases, ROW practice groups can offset some revenue losses at their appraisal firms from delayed projects and the challenges in their other business segments by providing expert witness testimony at hearings and trials for planned infrastructure projects.