REAL ESTATE - Carlini's Comments

INFRASTRUCTURE RENAISSANCE: WE NEED IT NOW

Filed Friday, April 18. 2008

There needs to be ubiquitous state awakening to commit billions of dollars for major infrastructure endeavors like what we’re seeing in New York and New Jersey, James Carlini writes from the New York Palace in New York City.

While in New York City on Tuesday, I sat in on a business breakfast forum that featured Anthony R. Coscia. He’s the chairman of the board of commissioners of the Port Authority of New York & New Jersey. Coscia referenced the criticality of getting large infrastructure projects done in order to sustain regional viability for the New York and New Jersey areas.

He outlined several projects that have progressed from a wish list to a project pipeline to the beginning of implementation. So, what is the port authority? This is from its Web site:

The Port Authority of New York & New Jersey manages and maintains the bridges, tunnels, bus terminals, airports, PATH and seaport that are critical to the bistate region’s trade and transportation capabilities.
Through our facilities and services, people are able to make vital connections and businesses are able to grow. Providing safe and efficient travel is our highest priority and enhancing the well-being of everyone who lives, works and travels here is our strongest commitment.
Mission: To identify and meet the critical transportation infrastructure needs of the bistate region’s businesses, residents and visitors.
We provide the highest quality and most efficient transportation and port commerce facilities and services that move people and goods within the region. We provide access to the rest of the nation and to the world and strengthen the economic competitiveness of the New York and New Jersey metropolitan region.

One of the major projects that the Port Authority is taking on is the rebuilding of the World Trade Center with the Freedom Tower. It’s a memorial and several buildings that will replace what was once there on that financial campus. Coscia says it’s a very complex project with $16 billion of construction costs going into 16 acres of land.

The Port Authority has taken a leading role and has made real and substantial headway. This building endeavor has to move forward while light-rail systems run through the same location. Some were concerned about getting the project under way and the Port Authority stepped up to the challenge.

Adding Another Airport, Light-Rail System Into New York

Coscia focused on the 110 million passengers per year who currently come into the airports of New York and New Jersey (JFK International Airport, LaGuardia Airport and Newark International Airport) and are under their control. By 2025, he says they are expecting 150 million passengers.

In order to accommodate this increase, the Port Authority has already made some investments in purchasing a smaller regional airport (Stewart International) to offload some of the regional flights going into the major airports. Since the port authority purchased Stewart, which is about 60 miles north of New York City, Coscia says business has already tripled.

In another project, he’s looking to implement a new light-rail system to give surrounding areas a better way to access downtown New York City.

He’s on the right track to add to the infrastructure, which becomes the platform for economic development and regional sustainability. Mega projects are fundamental in acknowledging change in the global economic markets. Infrastructures that haven’t been upgraded for decades can’t be effectively used to support the current and future rigors of global competition.

What Was Omitted

Coscia focused on several major projects that he said are needed for regional sustainability. What he didn’t discuss was the upgrading of the network infrastructure as well. This is from Crain’s New York Business:

He dismissed suggestions that – given the struggling economy – the authority should not hold Ground Zero developers to the aggressive timetables agreed to in June 2006.
“I humbly disagree that there will be four empty office buildings,” he said. “These buildings should be built on the schedule that was proposed. I think they will be occupied.”

He may be surprised. If the buildings don’t offer broadband connectivity, they won’t be aggressively pursued by as many potential corporate tenants. Broadband connectivity has become one of the top three criteria for corporate site-selection committees. Buildings that fail to offer the latest and greatest in connectivity could be obsolete before they’re occupied.

What About Chicago?

Chicago has to compete with the likes of New York, Los Angeles and others to woo tourists and major business development into the city. This isn’t something to take lightly. New York and New Jersey have come to the political conclusion that building solid infrastructure supports long-term economic development.

With all their political differences, if they can get it together Chicago and Illinois better clear all their political shenanigans and get moving.

An article in the May 2008 issue of Popular Mechanics states there are 10 large pieces of infrastructure that need to be fixed now. Chicago has the great recognition of having not one but two projects in the top 10: Chicago’s O’Hare Airport and the circle interchange in downtown Chicago. These are not small projects and they’re not being advanced as fast as they should be.

It’s imperative to get new runways at O’Hare. What about a third airport? Looking at Rockford Airport – which already has long runways and is connected to both O’Hare and downtown Chicago via the I-90 tollway – would be a smarter and more expedient move than building something from scratch in Peotone, Ill.

Petty politics in Illinois along with exorbitant county taxes will drive us more into multibillion-dollar deficits. We’ll also see more job erosion. Both political parties have to wake up and smell the devastation they’re creating in this state with their inaction for big plans.

There needs to be a reigniting of passion for getting large projects done in Chicago and the region. This means real projects that build a solid platform to entice businesses to relocate their corporate headquarters here and not somewhere else.

While too many Chicago and Illinois politicians want to milk the infrastructure with tolls, taxes and patronage jobs, now’s the time they have to reinvest if they want to move forward. As they say: “You have to spend money to make money.” Leaning on aging infrastructure to support economic vitality is no longer an option.

Infrastructure doesn’t stop at railroads, roads and bridges. It also includes network infrastructure. Any area’s infrastructure should be comprehensively reviewed and assessed if that area is serious about surviving in the global economy.

Coscia and so many others involved in economic development and commercial property development across the country need to understand that the three most important words in real estate have gone from “location, location, location” to “location, location, connectivity”.

Carlinism: It’s time to make the connection. Broadband connectivity is part of the infrastructure that supports regional viability.