How the 1.2 trillion dollar infrastructure bill will affect multi-family

Dear CPI Capital Real Estate Investment News subscriber,

The recently approved 1.2 trillion dollar infrastructure bill is likely to benefit multi-family properties in a variety of ways, further stimulating demand for residential rental accommodation across the country.

This Infrastructure Investment and Jobs Act (“IIJA”) has now been approved by the House of Representatives and will provide funding for, amongst other things, the repair and upgrade of roads, bridges, mass transit and high-speed rail systems, the power grid, water supplies and, importantly, broadband across the country.

Obviously, there will be a knock-on effect in job creation and support for communities, as well as creating additional demand for multi-family rentals.

This bill is just the first step in President Joe Biden’s housing agenda plans as the proposed $1.75 trillion “Build Back Better” (“BBB”) bill is still working its way through Congress, with a vote likely in early December. Biden is quoted as saying that the BBB “...will create millions of jobs, turn the climate crisis into an opportunity and put us on a path to win the economic competition for the 21st?century.”

The BBB bill contains at least $150 billion for affordable housing and could include $65 billion for public housing repairs, a huge $25 billion for rental assistance (again, a positive for multi-family assets) and $15 billion for the Housing Trust Fund.

Once approved, this legislation will undoubtedly further benefit participants in the multi-family and commercial real estate industry. Such spending will not only enhance existing communities but help create new communities—and new demand for multi-family accommodation, given that infrastructure improvements and housing demand are intrinsically linked.

Funds allocation

Some of the key spending allocations in the IIJA include:

• $110 billion for new roads, bridges and major infrastructure projects
• $65 billion for enhancements to broadband, more widespread and faster internet access;
• $55 billion to improve for water quality and wastewater treatment quality;
• $73 billion to upgrade the electrical grid;
• $50 billion for addressing climate issues and the impact of floods, wildfires and other climate-related events;
• $66 billion for improvements to passenger and freight rail systems, in high-speed rail and safety improvements;
• $39 billion for public transit systems;
• $21 billion for working towards cleaning up the environmental;
• $7.5 billion for a network of electric vehicle charging stations.

The financial impact of both of the aforementioned bills means that the multi-family sector will grow further as demand increases, be able to operate more efficiently, and continue to offer attractive investment returns.

At CPI we continually monitor the impact of new legislation on the multi-family and other real estate related investment sectors. We are always looking for new investment opportunities, irrespective of the sector, as we continually aim to achieve the best possible returns for our investors.

The passing of the IIJA is a very positive development and we’ll be watching the ongoing progress of the BBB bill over the next few weeks with great interest!

Yours sincerely,

- August Biniaz

Chief Strategy Officer, Co-Founder CPI Capital