The Ground Floor

Private Infrastructure

Attracting more private capital within the next ten years is critical for the United States' infrastructure problems, which could reach crisis proportions, according to a key finding in Infrastructure 2008: A Global Perspective, a report published jointly by New York-based Ernst & Young LLP and ULI.

Currently, the U.S. has a US$170 billion annual funding gap for infrastructure projects, the report estimates. However, the gap is widening every year and the gap could balloon over the next few years as local and state governments experience "revenue shrink," particularly from lower property tax collections.

The report concludes that infrastructure funds -- private vehicles set up to invest in infrastructure assets -- currently hold an estimated US$400 billion in capital for investment. This, combined with broader adoption of the public/private partnership model, could alleviate much of the current strain on public coffers caused by the need for radical improvement in local, state and regional infrastructure, says the report. However, the report also questions whether the U.S. has the political will and determination to take a long term approach to the infrastructure issue.

The EY/ULI report provides a snapshot of current and planned infrastructure investment in a variety of categories across the globe, with an in-depth look at the United States, China, Japan, India, and Europe.

For more information on the report and to view a press briefing, go to ULI's webcast of the release.

Sky Gardens

In 2007, 30 percent more green roofs were installed in North America, the Green Roofs for Healthy Cities' 3rd Annual Green Roof Market Industry Survey said. According to corporate members of Green Roofs for Healthy Cities, the finding represents a five percent increase over 2006's annual market growth rate of 25 percent. The survey is based on square footage of green roof projects installed by GRHC's corporate members in 2007.

The top three cities on the Top 10 U.S. Cities list includes: No 1: Chicago, No. 2: Wilmington, D.E., and No. 3: Baltimore.

The city of Chicago remains the number one city for the fourth year in a row with over half a million new square feet of green roofs installed in 2007, evidence of the city's commitment to becoming America's greenest city through green roof policies and incentives that support green roofs, walls and other forms of living architecture.

Newcomers to the list include: Brooklyn, N.Y.; Virginia Beach, Va.; Royersford, Pa.; Philadelphia, Amery, Wisc.; and Germantown, Md.

NYC and One Million Trees

MillionTreesNYC, a public/private partnership between the New York City Department of Parks & Recreation and New York Restoration Project (NYRP), aims to plant and care for one million new trees in New York City by 2017.

Through a mix of public and private plantings, MillionTreesNYC, an important initiative of Mayor Bloomberg's PlaNYC, will expand New York City's urban forest by 20 percent. MillionTreesNYC partners and citizen volunteers are planting in places such as schoolyards and playgrounds, public housing campuses, business districts, commercial and residential developments, front yards, and other private lands.

During MillionTreesNYC Month in April, MillionTreesNYC launched a campaign encouraging all New Yorkers to "think globally and plant locally" enlisting community, corporate and youth volunteers from all five boroughs to roll up their sleeves and plant trees. Throughout the month, parks, New York Restoration Project, and MillionTreesNYC partners have hosted free citywide events for the public including tree education seminars, tree stewardship workshops, tree pruning instructional courses, Urban Park Ranger tree identification hikes, and large scale volunteer tree plantings.

Business of Nature Still Strong, Survey Says

Landscape architects reported that they were busy during the first quarter of 2008, according to the American Society of Landscape Architects (ASLA) Business Quarterly survey.

According to the results of the survey 55 percent of respondents described their billable hours as average or above in the first quarter of 2008 and 53 percent reported average or above inquiries during the same period. Additionally, 38 percent plan to hire in the second quarter of 2008 -- unchanged from the previous quarterly survey.

"While the majority of firms reported steady or increased work, the housing troubles has certainly slowed some segments of the market -- especially major real estate developments," said Nancy Somerville, executive vice president and CEO of ASLA. "Landscape architecture firms have turned to high-end residential work, commercial development, and public sector projects to mitigate most of the slowdown from the housing market."

The survey also asked about interest in sustainability, with nearly 72 percent of respondents reporting clients as "very interested" in sustainable issues.

Respondents report the top sustainability issues as water including bioswales, stormwater management at 72 percent; energy efficiency through irrigation, low-maintenance, native plants, less lawn at 68 percent; Accreditation at 54 percent; habitat (open space and preserving natural habitat) at 32 percent; green roofs at 28.0 percent; and links to transportation, trails, and parks at 25 percent.

The ASLA Business Quarterly survey was fielded March 20-31, with 427 firms responding.

Commercial Real Estate Chugs Along

In today's ULI's Industry Snapshot, "What's Next for Real Estate: Catch a Glimpse," discussed the latest on what lies ahead for the real estate industry during turbulent economic times. 

Joseph F. Azrack, president and chief executive officer of Citigroup Property Investors in New York City, and ULI Senior Resident Fellow Stephen Blank discussed how job growth will ultimately affect the commercial real estate market especially in the office supply market.

According to Azrack, depending on what employment rates do in the future, there is the potential for more credit problems. However, he suggested that the commercial market has not yet been affected yet. Azrack explained that we will know when the market is returning to normal because the LIBOR spreads will close up and banks will lend to private equity firms.

More information on this webcast is available at www.uli.org/webcasts

Monday's Numbers and Noteworthy News

Newsworthy News

Headline stories from the coming Monday’s edition of Real Estate Finance & Investment sort of summarize where the world is today:

"Seller Financing Emerges in New York" -- In recent weeks, sellers in New York have been offering would be buyers a helping hand.

"SL Green: Our Rents May Drop 10%" -- SL Green Realty Corp., New York's largest office landlord, said that the company could see a 10 percent to 15 percent drop in net effective rents over the next 12 to 18 months, mostly due to financial services firms that have dropped out of the hunt for space.

How much have spreads widened?

The following chart details the increase in spreads required to sell various tranches of commercial mortgage-backed securities between June 19, 2007 (well before the onslaught of the current capital market crises and April 11 to 17, 2008, the date the most recent two CMBS deals priced:

Spreads to Interest Rate Swaps (in Basis Points)
Credit Rating	AAA (5 Year)	AAA (10 Year)	A (10 year)	BBB (10 Year)	BBB- (10 Year)
06/19/07	+22	+27	+62	+135	+210
04/11-17/08	+280	+190	+800	+1,500	+1,800
	+258	+163	+738	+1,365	+1590

And not withstanding the dramatic increase in spreads, inventories of unsold CMBS remain high!