Report finds credit crunch accounts for 20% of nation’s stalled projects

The American Institute of Architects (AIA) released a comprehensive report, which concludes 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, 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.”

The report found:

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 noted. “Until more credit is extended, the potential of non-residential construction to promote greater levels of economic growth will not be realized.” BD+C

Boyd R. Zoccola is Chair and Chief Elected Officer of BOMA International. A BOMA member since 1994, he has served on the Executive, Finance, Investment, and Medical/Healthcare Facilities Committees. An Indiana Real Estate Principal Broker and a board member of the Real Estate Round Table, he is Executive Vice President of Hokanson Companies, Inc., of Indianapolis, and has been involved in the development of $600 million worth of real estate. On a volunteer basis, Zoccola was president of Horizon House and a board member of Girls, Inc. He holds a BA in biology from Indiana University.