Brad Richardson l Palladium - Feb 01 2021
How Infrastructure Will Adapt for a More Sustainable Future

Credit: Martin Fahlander

COVID-19 has disrupted the development of infrastructure across the globe, which will have repercussions for years to come. From upgrading bed capacities and pandemic provisions in hospitals, to improving communities’ ability to withstand environmental crises, infrastructure will be a key component of our efforts to ‘build back better’ post-pandemic. But doing so will require a shift in government priorities and perhaps even more importantly, spending.

While governments have stimulated national economies in the midst of the COVID-19 crisis through relief efforts and support for their unemployed populations, there will need to be a shift, albeit a difficult one, to stimulate economies by investing in built assets and more future pandemic resilience. Infrastructure spending is one of the best ways to recover an economy, giving not only a boost to jobs, but lifting our social and economic resilience.

As we look towards 2021, I see two trends emerging in order for the infrastructure sector to adapt for sustainability and to support national economies: a push to localise infrastructure in order to mitigate sovereign risk, and a pivot to meet the needs of a post-pandemic world.

Localising Manufacturing to Mitigate Risk

Many countries will take the lessons learned from COVID-19 related shutdowns and movement restrictions, and shift focus from external development and manufacturing to ‘internal’. As the world shut down, many countries found themselves floundering as they discovered outdated or lacking infrastructure that could no longer support the needs of a grounded population at home.

But the need to focus on localised infrastructure is two-fold.

Firstly, the shock of COVID-19 has put the need for many countries to bolster their own national infrastructure into sharp focus. We can expect a huge push as countries beef up roads, education facilities, hospitals, and all those things that make individual economies stronger.

Secondly, countries will be eager to mitigate their sovereign risk. For some countries, this shift is already occurring as large pharmaceutical corporations move manufacturing and research facilities to countries with low sovereign risk that align with likeminded political thinking. Many countries with stable governments will seek to bolster relationships with nations with whom they already trade and trust geopolitically.

As national governments start to focus more at home, countries will shift to local manufacturing and solutions that improve connectivity, with railways and highways progressing in leaps and bounds. And as governments demonstrate their willingness to spend and stimulate their economies, the private sector will follow suit.

"The time is ripe for governments to think about building for the next generation."

Pivoting to a Post-Pandemic World in Corporate Real Estate

We know by now that the world may never be the same and that our new ‘normal’ may look a bit different than the one we left in early 2020. But as our daily lives adapt, so must the infrastructure that supports us.

For many countries, including my home of Australia, the tourism industry has taken a significant hit. While cheap mass-produced crowded holiday destinations may take a long time to return to the days of yore, boutique experience-based holidays will certainly provide opportunity for people to holiday in a different way locally. This will impact new hotel construction, which will continue to slow down alongside reduced international travel.

On the other hand, the direction that corporate offices are moving with remote working is clear. Nearly overnight we’ve jumped 10 years in the take-up of virtual meetings. Now that many organisations know and understand that business-as-usual can continue from a remote standpoint, there will be a massive shift in what modern corporations look like. Not only are organisations still getting the job done, but they’re saving money and costs on line items across the board.

What this means for the future of high-rise buildings and large office spaces remains to be seen, but we’re going to need to creatively repurpose some office spaces for post-pandemic life, we might even see a pivot from open plan to move rooms capable of managing isolation/separation.

Infrastructure for the Next Generation

The time is ripe for governments to think about building for the next generation. There are plenty of infrastructure-minded projects that can be done to stimulate the economy, increase localised manufacturing and create a lasting legacy for the future. Look to Australia who in 2005 through 2015 built multiple billion-dollar hospitals, boosting both the economy and lifting the effectiveness of the healthcare system across the country.

In the coming weeks and months, governments will need to ask themselves what they can and will do post-COVID-19 that won’t necessarily create debt but will create a more sustainable lifestyle for the future of their citizens. The pandemic has created a pivotal opportunity for nations to invest in infrastructure to “build back better” both at home and in the developing world.

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