The 2017 election and its impact on infrastructure construction

By: Jacqueline Dompe, Northwest Lead, JLL Project ...

Dompe_JacquelineBy: Jacqueline Dompe, Northwest Lead, JLL Project and Development Services

Infrastructure spending and roll out plans were key talking points for the candidates along the 2017 election campaign trail, yet the true implications on public spending, government partnerships and the effect on the construction labor industry still remain to be seen. What can we expect to see in the coming months?

According to the American Society of Civil Engineers, the amount of U.S. spending needed for highways, airports and other infrastructure is projected to fall about $1.4 trillion short of the $3.3 trillion needed through 2025. There is less of a debate over if there is a need to invest in our nation’s infrastructure, but the realities of how to achieve a successful implementation of any infrastructure program require examination.

President-elect Trump’s initial plan? Provide $1.0 trillion in spending over 10 years through a variety of government and private partnerships, averaging about $100 billion per year. To put that value into perspective, an infrastructure bill was passed in 2015 totaling $302 billion in spending over 5 years, averaging about $60 billion per year. This makes the president-elect’s initial sum almost double that of the 2015 bill at a time when we’ve hit the lowest point in infrastructure spending in nearly 30 years.

Post-election, the true package value has been shuffled around and the final sum remains to be nailed down. No matter the magnitude, if an infrastructure spending package comes to fruition we can expect a significant impact on the workload of firms specializing in infrastructure projects, the availability of labor, and potentially even more construction on our daily commutes.

This comes at a time when the majority of U.S. citizens agree that our infrastructure needs updating. According to a recent American Institute of Architects poll of 2,108 U.S. adults, well-maintained roads and schools in good condition were considered the paramount “must haves” in terms of U.S. infrastructure, polling in at 79 and 73 percent respectively.

However, many are questioning if there is enough skilled construction labor to tackle the new projects that would pop up from an increase in infrastructure spending. Construction unemployment is low compared to other stimulus-response business cycles.

Pending a spending bill approval and project funding, the labor issue could either compound or work in favor of the construction economy. This depends heavily on not only the current stage of the commercial real estate development cycle, but also the broad economic cycle as a whole.

In the coming months, a critical factor to acknowledge when considering the anticipated commercial slowdown will be timing of the proposed infrastructure uptick and how it will pair with a potentially increased involvement from the private sector.

Needless to say, given the current public and international response to the election results, we can expect many opinions and discussions to arise surrounding infrastructure spending and its role in President-elect Trump’s term. No matter the results – we can all agree that any significant increase in government and private spending on infrastructure would have a strong impact on the construction industry as a whole. Between labor questions, projects under way and project financiers, we anticipate our leaders and communities to use these next several months to develop a compelling plan to respond to our infrastructure needs.