How Will the Infrastructure Investment and Jobs Act Affect the Real Estate Industry?

In 2021, Congress passed groundbreaking infrastructure legislation. The Infrastructure Investment and Jobs Act, or IIJA, is expected to increase funding for infrastructure projects around the country, including rebuilding roads, bridges, and rails. The IIJA is also expected to increase access to clean drinking water and high-speed internet and fund measures to address the climate crisis and investments in rural communities.

The IIJA has since begun increasing funding to many different government agencies, which in turn distribute these funds to many programs aimed at bettering the nation’s infrastructure. Industries impacted include construction, clean energy, multi-family construction, commercial real estate, and other small businesses. 

Many businesses and industries benefit from the programs put forth by the IIJA. Businesses can take advantage of funding made available by the bill, as well as benefit from their communities having more higher-paying jobs available. The following section explains how the IIJA affects different industries and businesses in more detail.

Real Estate

After years of the United States chronically underinvesting in infrastructure, the IIJA finally provides the funding needed to improve the roads and bridges across the country, expand access to clean water for underserved communities, and provide more affordable internet access. This improved infrastructure will open up entirely new real estate markets and increase the value of homes across the country.

For some time, the real estate market has experienced record lows in the supply of homes for sale. This throws off the balance of the real estate market and can make it difficult for families to find the home they need within their budget. However, the IIJA will help turn this around by funding new building projects, including new homes.

Commercial Real Estate

The IIJA invests heavily in new infrastructure, which benefits the commercial real estate industry. Government agencies can now spend more funds on new roads, buildings, bridges, and other projects. Commercial real estate contractors stand to benefit from these additional funds, and new jobs are expected to be created in this area, as well. In fact, due to this new infrastructure bill, Cushman & Wakefield predicts that the total demand for commercial real estate space could be 1.2% higher over the next five years. According to Moody’s Analytics, this translates into an additional $758 billion of output by 2031. The impact of IIJA on commercial real estate is likely to be mostly secondary. The increase in productivity due to the funding from the IIJA is expected to put a greater demand on America’s extensive network of transportation and industrial warehousing, thus increasing the value of these properties.

Affordable Housing

In the fall of 2022, the Harvard Joint Center for Housing Studies and the Urban Institute came together at a workshop to determine how the IJAA would benefit access to affordable housing. They concluded that the IJAA could be used to benefit affordable housing in three ways:

1. Use technology to integrate housing and transportation. The DOT could work with housing departments to create plans that connect transportation and housing.
2. Implement rigorous criteria when providing transportation grants to ensure that new infrastructure improves housing affordability and prevents displacement
3. Require all projects funded by the IJAA do no housing harm. Projects likely to impact communities that require affordable housing negatively could be stopped.

How Should Businesses Take Advantage of the Infrastructure and Investment Act?

The IIJA provides many opportunities for new job creation and growth for multiple industries. Businesses can check the IIJA guidebook to see if they qualify for any of the benefits provided by the IIJA. Then, they can apply to receive funds for various projects.

If you would like to learn more about how you could take advantage of the IIJA, reach out to a Whittlesey Advisor and get access to our personalized, expert services.

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