Where Design and Construction Meet Match.Com
Following in the well-trod path of Match.com and other online dating services, the American Institute of Architects thinks it has found a way to attract investors to the thousands of industry projects put on hold—send the potential suitors to cyberspace for a database of the good-lookers. That is, the AIA is compiling a list of stalled projects nationwide that “make sense” to move forward but for lack of financing, and a list of the types of projects that financial entities specialize in.
“It’s the Match.com for projects,” says Clark Manus, AIA president.
Clark believes AIA’s initiative will help to shed light on the credit-worthiness of restarting some of the projects that investors have overlooked. As proof, he cites the association’s announced plans in June to develop the database.
“That resulted in a number of inquiries from potential investors,” he says. “There are pockets of [investors] out there that are specifically looking for projects,” and the database will make it easier for them to find what they are looking for.
Any industry professional is welcome to add a project to the list. “Right now [they] can send us information on stalled projects, and we’ll enter it,” says Paul Mendelsohn, AIA vice president of government and community relations. But eventually the site will become more of a self-service tool that will allow users to upload their own information.
“Database is kind of an erroneous term,” Mendelsohn says. “It will launch as a Web-based site that has the ability to capture information from the project side and the financing side, and will be searchable.” It will feature drop-down menus with fields of data such as project size and location, he adds.
AIA is currently working with its membership and other professionals in and out of the industry to develop those searchable fields and compile information.
“We won’t rank projects,” Manus says. “We are supplying a mechanism for which a decision can be made ... to connect two potential business partners.”
AIA plans to launch the site at the end of October or beginning of November, modifying it in stages over time. “The intent is for the initial launch to be usable,” Manus says, “but it will go through trial-and-error” upgrades with time. One of the glitches so far has been with projects that are sensitive and/or proprietary, he says, “so we’re trying to find a balance of getting just the right amount of information.”
“We don’t normally share information about projects with association members, so it’s sort of new territory for us to seek that information and put it in a database,” Manus says. The organization seeks to identify where opportunities exist for lenders that want to invest in projects, he says.
The idea for the project grew out of AIA’s Grassroots Leadership Conference last February at which Michelle Moore, the White House Federal Environmental Executive, discussed President Obama’s then-new Better Buildings Initiative that aims to reduce energy use by 20% in existing commercial buildings by 2020.
“Following that, we had meetings with her and others from the Obama Administration,” Mendelsohn says. AIA was asked to discuss how architects could help to identify sustainable projects specifically related to retrofitting existing commercial buildings. “We thought, as long as the White House was asking us about projects specifically related to energy retrofits, why don’t we expand that to identify all stalled projects that aren’t moving forward because of lack of access to credit,” he says.
AIA initially planned on compiling a database to use as an advocacy tool to show the impact of stalled projects on design and construction jobs, Mendelsohn says. But the organization took the concept a step further last June through its participation in the Clinton Global Initiative America program that brings together government and private-sector groups to commit to work on a range of issues including job creation. Working with other CGIA members, AIA began to identify potential financial backers that might be interested in the database.
“We had conversations with a number of others on the financial side of things, and they expressed interest,” Mendelsohn says. That lead to the decision to create a Web porthole that could match projects with investors, which comes at a time when the amount of credit-worthy projects that have been put on hold has grown significantly, he says.
An AIA survey of its membership earlier this year showed that about two-thirds of respondents had at least one project that was stalled due to lack of financing, despite record low interest rates, Manus says. Of the 63% of firms surveyed with stalled projects, the average value of each stalled project was nearly $50 million per firm, he adds. “In large part, the fortunes of the entire U.S. economy rests on the jobs-creating potential of the design and construction industry.” He cites U.S. Census Bureau data showing that the industry accounts for $1 in $9 of the Gross Domestic Product.
The economic downturn has been more severe than anyone expected, Manus says. One of AIA’s advocacy objectives has been to draw attention to the design and construction sector’s need for improved access to credit, and this initiative complements that, he adds.
For more information on the database or to list a stalled project, send an e-mail to mailto:StalledProjects@AIA.org.