The American Institute of Architects announced the launch of an online database of projects the institute says are stalled due to a lack of financing.
|AIA said the stalled-projects database was launched in response to ongoing tightness in credit markets for construction.|
The institute in June announced plans to develop the database, in response to ongoing tightness in credit markets for construction; see AIA, Seeking to Thaw Credit Markets, Plans ‘Stalled Projects’ Initiative.
AIA said the database, located at www.aia.org/stalledprojects, will facilitate networking of developers and architects with potential investors in projects. The institute said the database has been developed “to help address one of the persistent impediments facing the design and construction sector,” which accounts for $1 in $9 of U.S. Gross Domestic Product, according to the U.S. Census Bureau.
“Each $1 million in new construction spending supports 28.5 full-time, year-round-equivalent jobs, according to a study by George Mason University economist Stephen J. Fuller,” the institute said in announcing the launch.
| Clark Manus|
| AIA President|
“In large part the fortunes of the entire U.S. economy rest on whether the design and construction industry can create jobs,” said AIA President Clark Manus, FAIA.
“For months, our industry has continued to suffer primarily because banks won’t lend. With this unprecedented online database portal, the AIA has decided to do something that could create more jobs and help grow the economy.”
AIA said the “credit-crunch crisis” in design and construction shows no signs of easing. In a report issued simultaneously with the announcement on the launch of the database, the institute said its economics and market research group has found that the share of projects stalled due to financing problems through August 2011 has almost doubled since 2008, and that one in five stalled projects directly results from financing problems. The report can be accessed at Stalled Construction Projects and Financing.
“Indeed, almost two-thirds of architects responding to a May AIA survey reported at least one project stalled due to lack of financing,” the institute said.
The Projects Database
To populate the database with both stalled projects and investors interested in financing them, AIA said it has initiated a communications campaign to solicit information about stalled projects around the country from its members and allied professionals. Since going live on Oct. 31, the site has attracted projects seeking a total of almost $230 million in financing.
The institute said it expects the numbers to grow as word of the database spreads in the the architecture profession.
“The four-month project to create this one-of-a-kind portal represents a comprehensive, intense effort by this organization to address an issue of vital importance to our members and to the economy in general,” said AIA Chief Executive Officer Robert Ivy, FAIA.
“As this initiative takes hold, we hope that the AIA’s Stalled Projects Page will prove to be an immense asset to architects, builders and developers throughout the country.”
How the Database Works
By creating a log-in and clicking inside the “Get Started Now” box on the site, architects and developers can fill out a form and tell investors about their projects. By clicking in that same box, investors list their companies and tell project leaders about their firms and the types of investments they are interested in making.
Once registered, both project owner and investor can see details on stalled projects or peruse investor information.
Report Confirms Scope of Credit Squeeze
AIA said the report on stalled projects confirms that the major obstacle holding back job creation in the U.S. is the persistent lack of construction financing, despite record low interest rates.
“This report should lay to rest any doubt about what is a key source for holding back job creation in the United States,’ said Kermit Baker, AIA chief economist of the AIA. “It is the lack of financing especially to the design and construction sector, which accounts for $1 in $9 of U.S. Gross Domestic Product.”
Relying on data compiled by McGraw-Hill Construction and Reed Construction Data, AIA said the report found that:
• the share of projects stalled due to financing problems through August 2011 has almost doubled since 2008;
• one in five stalled projects are directly resulting from financing problems;
• financing problems account for a higher share of stalled projects in the education and multi-family sector;
• more than 25% of projects reported as stalled due to the credit crunch could qualify for LEED, Green Globes or other green certification status;
• financing issues are less of a factor holding back projects in the manufacturing, private healthcare and retail environments.
“Whatever, the reason—be it over-regulation, the threat of a double-dip recession or the reluctance to have too many loans on the books, lenders are just not lending to a major job-producing sector of the American economy,” Baker said.
“Until more credit is extended, the potential of non-residential construction to promote greater levels of economic growth will not be realized.”
More information: www.aia.org.