Commercial real estate professionals have expressed an overwhelming interest in future infrastructure investment this year, especially with President Donald Trump’s push to boost U.S. infrastructure spending to $1 trillion — although not much headway has been made on that front.
As the country awaits an official plan from the Trump administration about how to muster this $1 trillion for rebuilding, the glaring question is whether these funds will come from the federal government or private investment.
Amid all the unknowns, one thing is certain — there are plenty of projects to go around, with the American Society of Civil Engineers estimating that the country needs $3.6 trillion worth of upgrades by 2020.
The civil engineering advocacy group gave the country's infrastructure systems a "D" on its report card, taking into account the state of the country’s airports, bridges, dams, ports, roads, schools, transit systems and more, grading each category based off its own merit. The only area in which the U.S. did not receive a "C" or below was for its railroad systems.
As most core commercial real estate sectors begin to mature in this economic cycle, investors are increasingly turning to alternate investments for safe returns. Altus Group director of research Chuck DiRocco said the opportunities for investors to get on the infrastructure investment bandwagon are vast.
“Public transportation, the highways and [other] transportation-type projects are the most beneficial for commercial real estate,” DiRocco said. “We have very dense, congested and urbanized structures, and we have to have the transportation and the walkability for this.”
Many investors view Trump’s infrastructure initiative as a great money-making opportunity, should the new administration make any progress. Investors should watch the stocks of five infrastructure companies in particular.
Caterpillar (CAT)
A machinery and engine manufacturer in Peoria, Ill., with a market cap of $54.09B
Vulcan Materials (VMC)
A Birmingham, Ala.-based construction materials producer and distributor with a market cap of $15.43B
United Rentals (URI)
A construction equipment rental company in Stamford, Conn., with a market cap of $10.2B
U.S. Steel (X)
A steel producer and provider based in Pittsburgh, Pa., with a market cap of $5.93B
AECOM (ACM)
The architecture and engineering design firm based in Los Angeles has roughly 95,000 employees and a market cap of $5.42B
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