The latest half-baked idea
Some people in Congress want to build more commercial real estate. Go ahead, read that sentence again. A new Senate bill offers a strategy for populating the country with a whole new set of science parks.
One of the co-sponsors is Arkansas Democrat Mark Pryor:
The Building a Stronger America Act will help construct or expand science parks, which seek to encourage new startup businesses, generate student interest in science and technology fields, and encourage relationships between universities and industry. Specifically, the legislation allows the Secretary of Commerce to guarantee up to 80 percent of loans exceeding $10 million for the construction of science parks.
While the “Building a Stronger America Act” is such an original-sounding, inspiring title, I’m with Paul Kedrosky on this one: “Are you people completely mad?”
After all, we don’t have nearly enough vacant office space in the U.S. Rates are only running at a near-record 16.5%… with many cities at 20% vacancy and higher. And commercial real estate loans extant are merely teetering and threatening to bring down the regional banking system, so adding a few million more square feet will just give the system a helpful shove into complete insolvency.
I get that bill sponsors Olympia Snowe (R.) and Mark Pryor (D.) want to be helpful and create legislation to drive innovation. And I get that building science parks is fun and cool and way easier than actually doing science. So I understand the temptation entirely.
But… What are you thinking by adding subsidized office space to a market already under severe stress?
Hopefully, someone will come to their senses and propose an alternative: Yes, let’s encourage science and innovation, but how about starting with innovation in real estate? Instead of introducing subsidized loans to build or expand parks on new land, how about taking advantage of the glut of empty space? As I’ve written before, it just makes no sense.
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