Roth says it's critical to increase understanding of infrastructure's importance.

VANCOUVER, B.C.—Gleaming new building stock in a given city would count for little if a reliable wi-fi connection was a sometime thing and the roads leading in and out of the CBD were chronically congested. That’s the conclusion to be drawn from a new study conducted by the Urban Land Institute and EY, which found that the quality of infrastructure is a key driver of real estate investment and development decisions in cities around the world. The two organizations are releasing their Infrastructure 2014: Shaping the Competitive City report at ULI’s 2014 Spring Meeting here.

“Helping stakeholders better understand the importance of developing and maintaining infrastructure, and providing a clear vision of what those infrastructure investments can accomplish, are critical,” says Howard Roth, EY’s global real estate leader. Adds Patrick Phillips, CEO of ULI, “We have entered a new era that requires new approaches to funding and building infrastructure to support the creation of communities that are healthier, more livable, economically prosperous, and environmentally sustainable.”

ULI and EY conducted a survey this past January among nearly 450 public sector officials and senior-level real estate executives in the US as well as Europe and Asia Pacific to get their take on the subject. Eighty-eight percent ranked infrastructure quality as the top influencer of real estate investment and development in a given market. On the whole it topped demographic considerations, including consumer demand and workforce skills, although the private sector ranked consumer demand higher.

Strong telecommunications systems, such as high-speed Internet capability, topped the list of infrastructure categories driving real estate investment. “Today’s real estate consumers expect reliable and high-quality access to wireless networks,” the report states, and quotes a hospitality executive as calling bandwidth “absolutely essential.” Other important components include good roads and bridges, and reliable and affordable energy.

The public’s willingness to pay for infrastructure was ranked as the top factor shaping both infrastructure and real estate development over the next decade. It was followed by consumer demand for compact, walkable development, and the prevalence of families with children. The cost and availability of energy and the use of innovative pricing systems to fund, manage, and operate infrastructure came in slightly lower in the rankings.

Three-quarters of the respondents identified cooperation between developers and local governments as the most significant funding approach for new infrastructure. Other strategies that require collaboration between real estate and civic leaders—among them, value capture and negotiated exactions—also top the list of likely infrastructure funding sources.

Yet the report notes that these strategies are limited in their ability to fund infrastructure at a systematic level, and may not be effective in all contexts. All funding strategies offered in the survey, including contributions from federal and state governments, received relatively strong responses, suggesting the need for a range of funding options.

Public transit led the list of infrastructure investment priorities. Seventy-eight percent of survey respondents gave public transit systems, including bus and rail, top billing for infrastructure improvements, followed by roads and bridges (71%) and pedestrian facilities (63%).

To learn more about the survey, visit ULI by clicking on this link or EY by clicking here. Follow’s on-site coverage from the ULI conference beginning later today.