March 9, 2011
An independent analysis conducted by Architecture 2030 and released in a fact sheet, illustrates that President Obama’s Better Buildings Initiative (BBI) can put the nation’s commercial real estate (CRE) market on the road to recovery, creating at least 300,000 new U.S. jobs and boosting tax revenue to begin putting money back into federal, state, and local coffers.
Even amidst guarded optimism as the unemployment rate fell to 8.9 percent in February, the nation’s ongoing CRE crisis continues to threaten the recovery, according to Architecture 2030. $1.4 trillion in CRE loans will become due between now and 2014 (half of which are underwater) and commercial vacancy rates show little sign of improvement.
According to industry experts, a confluence of factors affecting the CRE market – high vacancy rates and cautious lending – is tipping the scales against construction employment and overall job growth.
February’s U.S. Bureau of Labor Statistics report illustrates that the construction unemployment rate (21.8 percent) is still more than twice the national average, with apparent gains explained away by a bounce-back from losses due to severe weather in January.
The Administration’s BBI plan, unveiled early last month, spurs CRE recovery by leveraging a commercial building efficiency tax credit of $.60 to $1.80 per square foot for meeting energy reductions of 20 percent to 50 percent below the ASHRAE 90.1-2004 standard.
Architecture 2030 reports that for each $1 billion in BBI commercial building efficiency tax credits, the program will generate $16.4 billion in new private spending and $3.6 billion in new federal tax revenue.
The program will not only pay for itself, but also reduce deficit spending by $2.6 billion. Additionally, each $1 billion in CRE tax credits would do the following:
Although commercial buildings are often thought of as big-box stores or high rises in city centers, 90 percent are actually smaller than 25,000 square feet. These are mostly one- and two-story, single- or double-occupancy buildings that are easy and inexpensive to add on to and/or renovate. If Section 179D is amended, the tax credit would apply to property placed in service on or before Dec. 31, 2013.
In the next few months, how the nation responds to joblessness and the deficit will determine the strength of the recovery.
“Creating solid investments for CRE lenders and getting commercial vacancies filled is key to our economic recovery,” Edward Mazria, founder and CEO of Architecture 2030, said of the BBI plan. “This is a great opportunity for Congress to get to the heart of the matter and create hundreds of thousands of jobs without adding additional burden to the U.S. deficit.”
The Architecture 2030 Better Buildings Initiative Fact Sheet and companion analysis is available at the Architecture 2030 web site: http://architecture2030.org/hot_topics/bbi_fact_sheet.
* The 303,551 jobs created include 138,494 direct jobs, 78,071 indirect jobs, and 86,985 induced jobs.