Ibbotson was among the first to label real estate as an appropriate alternative investment several years ago. All of this begs the question: will infrastructure supplant real estate as an alternative for institutional investors and private equity investors – especially now as real estate valuations and underwriting practices are under siege.

Clearly liquidity is not going to be a problem for infrastructure investment going forward. Federal spending on such projects is slated to top $200 billion in the next two years, according to the Bureau of National Affair's Infrastructure Investment & Policy Report. Projects targeted include high-speed rail systems, highways and bridges, airports, pipelines, energy grids, mass transit, clean water, green technology and broadband, among others.

To allocate these funds and establish regional, if not national, priorities, the Obama Administration is also calling for the establishment of a National Infrastructure Bank in the fiscal 2010 budget proposal. To be sure this is hardly a foregone conclusion; some in Congress are already protesting it. For example, Sen. Max Baucus, D-MT, said at a Senate Committee on Environment and Public Works hearing on transportation financing recently there are several mechanisms to finance transportation needs, including the highway trust fund.

But while there is bound to be a lot of back and forth – not to mention political grandstanding over the proposal -- many believe it will eventually be a reality. "I think we will see some form of it enacted in the foreseeable term," Aleksandra Miziolek, co-chair of law firm Dykema's Infrastructure and Project Finance Client Service Team, tells GlobeSt.com.

Once it is, it will provide a much-needed source of capital to this sector, she says. "One of the things such a bank could do is take out some of the risk to the investment. The bank could also support a lot more pre-development work than is currently being funded. This is a very risky area for the private sector, Miziolek says. A National Infrastructure Bank "could fund the pre-development activity and if it turns out to be a success, the loan could be repaid on a subordinated basis."

Whether these investment flows, and the inevitable private sector activity they will attract, will compete with CRE is a difficult question to answer, Randle Smith, a portfolio manager for the Virtus Global Infrastructure Fund, tells GlobeSt.com. The Virtus Global Infrastructure Fund, a $50 million to $60 million unlevered pool of capital, invests in companies that focus on infrastructure and related areas.

"Our fund is based on the premise that infrastructure is an asset class; we have designed it to reflect the profile of an asset class," he says. "We only invest in owners and operators of infrastructure investment. It is a long term type of investment with an attractive yield, low risk and moderate returns."

Smith agrees that infrastructure appears to be following the same path that real estate took when it became an "accepted" alternative asset class. Institutional investors have been playing in this area since at least 2005; albeit not in the United States, he points out. Canada and Australia have been the recipient of these funds; again following CRE path's a decade or more ago.

Also, it was the real estate community that first keyed into the infrastructure space as a potential investment area, Smith says. "The two are closely related," Smith says. "I would suppose that any investor that has been investing in REITs or private equity funds focused on real estate would find infrastructure an attractive investment too."

The establishment of a National Infrastructure Bank, Smith says, "will definitely increase the buzz around this space, if nothing else."

Whether that buzz translates into greatly increased investment flows, much less investment that competes with CRE, is another matter, according to José Luis Vittor a partner with McDermott Will & Emery.

"One of the main problems with infrastructure investment has been that there are not that many projects ready to put up for public private mechanisms," he tells GlobeSt.com. "A lot of local governments are not ready or have not done the necessary process to have a project that could be viable or attract private sector financing." More than likely private capital will continue to flow to international projects, he says. "International sponsors are channeling investments to Canada or Latin America – not because of lack of interest in the US but because of lack of projects and lack of a regulatory apparatus.

Even when all the necessary pieces assembled for greater investment in infrastructure are in place, Miziolek doesn't foresee real estate ever being supplanted by infrastructure. "As a practical matter it is an asset class here to stay."