2024 Winter Issue of Urban Land - 51

All report, studies have documented rental
premiums of 3.5 percent and sale premiums
around 13 percent for highly efficient buildings,
as well as occupancy rates up to 7 percent
higher because of better tenant attraction and
retention.
Consumers and investors demand buildings
with decarbonization technologies. Most
Americans (74 percent) support participation
in international efforts to combat climate
change, according to a 2023 Pew Research
survey; a 2021 survey by JLL found that 70
percent of investors planned to have a budget
allocation in place by 2025 to address energy
efficiency and carbon reduction.
Federal funding in action
Companies including the Washington, DC
region's JBG Smith-a REIT with a portfolio
of 15 million square feet (1.4 million sq m)
of office, multifamily, and retail assets-are
evaluating how to leverage opportunities like
ones offered by IRA and BIL, including at
National Landing, a mixed-use development in
Northern Virginia anchored by Amazon HQ2.
" We are exploring the change in rules
for REITs introduced for onsite renewable
technologies-including our development in
Arlington, Virginia, " says Kimberly Pexton,
senior vice president, sustainability, for
JBG Smith. " While the IRA allows REITs to
monetize tax credits, the market for off takers
is in its infancy. "
Infrastructure improvements through the
BIL are likely to encourage the expansion of
complementary developments.
" We invest in National Landing because
of its rich and expanding multimodal
transportation network, " says Jay Corbalis,
vice president, public affairs, at JBG Smith.
" We don't necessarily build projects because
of specific infrastructure decisions, but,
in general, federally funded infrastructure
investments in multimodal transportation-
transit, walking, and biking-can support the
types of resilient and healthy developments
we aim to create. "
At ULI's 2023 Fall Meeting, Sara Neff, head
of sustainability for Lendlease Americas, spoke
about the potential of IRA tax credits for a
project's bottom line, as well as several of the
challenges in accessing funds. " You can't apply
for funds until a project is put into service, "
says Neff. " With our geothermal facility, we
spent the money several years ago, but that
project is not going to stabilize until 2026. "
BIL investments in sustainable
development
According to PwC and the Urban Land
Institute's Emerging Trends in Real Estate
2023, new federal funding will play an
important role in needed investment in public
transportation, which can support real estate
success.
The infrastructure funding bill will provide
almost $600 billion in transportation funding.
These dollars and other federal infrastructure
funds can be used to support equitable,
resilient, and climate-friendly transportation
investments-including bicycle lanes and
micromobility facilities. The bill allocates more
than $90 billion to modernize transit, improve
accessibility, and continue existing transit
programs. It also provides critical funding
for enhancing environmental resilience for
buildings and expanding water availability.
For much of this funding, however, state
and local leaders have significant flexibility
regarding which projects to support, meaning
that funds can be spent on priorities likely to
increase greenhouse gas emissions, including
new highway construction and expansion.
How new federal funds are used will play a
major role in setting the path for the country's
economic, social, and environmental future.
Developers and other land use professionals
have an opportunity to provide leadership in
local infrastructure conversations-including
by encouragement of spending on resilient,
sustainable, and equitable priorities, and by
making the case to local leaders that such
investments can support both community
priorities and economic and real estate
development.
Leveraging public funds with private real
estate investments can produce further
benefits for communities and developers alike.
For example, efforts to reconnect communities
divided by highway infrastructure through
projects that include public art, sidewalks,
or parks-including through the BIL's
Reconnecting Communities Pilot program-
may unlock opportunities for adjacent real
WINTER 202 4
URBAN LAND
51
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2024 Winter Issue of Urban Land

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