The Federal Reserve’s decision on September 18, 2024, to cut interest rates by 0.5 percentage points marks the first such reduction since March 2020. Prior to this, rising interest rates in recent years had placed significant pressure on public and utilities sectors, leading many planned infrastructure projects to be delayed or halted entirely due to the high cost of borrowing. As a result, both public agencies and utility companies had slowed investment, waiting for more favorable economic conditions.
With this rate cut, many of those stalled or postponed infrastructure projects may now be brought back into focus. This policy shift has far-reaching implications for the infrastructure sector, particularly in industries that rely on significant capital investments—such as public agencies and utility providers.
We’ll explore how this rate cut will likely drive the revitalization of previously delayed projects and create new opportunities for right of way services. As a leading provider of right of way services, ORC is well positioned to support public and private sector clients in capitalizing on these opportunities.
The Link Between Interest Rates and Infrastructure Investment
Interest rates play a pivotal role in determining the feasibility of infrastructure projects. When interest rates rise, the cost of borrowing becomes more expensive, leading many capital-intensive projects to be delayed or shelved entirely. This was the case in recent years, as multiple public agencies, utility companies, and private developers opted to slow their investment plans due to high financing costs.
With the Federal Reserve’s rate cut, the situation has shifted. The cost of borrowing is lower, making it easier for both public agencies and private sector players to fund large-scale infrastructure projects that had been on hold.
Public agencies can once again consider financing road expansions, public transit systems, and water infrastructure projects that were delayed over the past few years. Likewise, utility companies and private developers, who had scaled back their infrastructure plans due to the high cost of capital, may now resume long-planned projects.
Impact on Public Sector Investment
The public sector, which heavily relies on municipal bonds and other financing instruments for infrastructure investment, had been particularly impacted by higher interest rates. With rates now lower, the cost of issuing bonds decreases, creating a more favorable environment for funding infrastructure projects that were previously delayed.
Local, state, and federal agencies can now push forward with long-delayed projects such as highway improvements, bridge repairs, and public utility expansions. These projects will require efficient right of way services to ensure timely land acquisition and compliance with legal requirements.
Private Sector Impacts: Utilities and Developers
For utilities and private developers, the story is similar. The rate cut offers a renewed opportunity to pursue long-term infrastructure investments that had been paused. Investor-owned utilities, which had previously put off large-scale projects due to high borrowing costs, can now re-evaluate expansion plans for electric grids, natural gas pipelines, and broadband infrastructure.
Private developers, particularly those involved in renewable energy projects, had also been impacted by high financing costs. With interest rates now lower, many of these developers will be able to resume projects such as solar farms, wind farms, and energy storage facilities. As these industries ramp up their capital expenditures, the demand for right of way services will grow significantly.
The Potential Surge in Infrastructure Projects Requiring Right of Way Services
Why Right of Way Services Are Crucial to Infrastructure Expansion
Right of way services are essential in enabling infrastructure projects to proceed efficiently. From land acquisition to project management, right of way providers ensure that public agencies and utility companies can secure the necessary land to build new infrastructure, all while maintaining compliance with regulations and managing relationships with landowners.
Infrastructure projects previously delayed by high interest rates are expected to resume. This will increase the demand for right of way services. ORC, a leader in this industry, is well positioned to meet this growing need. ORC can support both public and utilities clients due to its nationwide coverage and large pool of agents, allowing it to quickly scale up operations.
Examples of Previously Delayed Infrastructure Projects Now Set to Accelerate
Several types of infrastructure projects that were delayed due to high interest rates are now expected to move forward, including:
- Highway and Road Expansions: State and local agencies had postponed road improvement projects due to high borrowing costs. With the rate cut, many of these projects are expected to resume, requiring significant land acquisition along transportation corridors.
- Renewable Energy Projects: Solar farms, wind farms, and energy storage facilities, which had been delayed due to high capital costs, will likely see increased investment as financing becomes more affordable.
- Utility Expansions: Electric, gas, and water utilities had slowed expansion plans, waiting for more favorable conditions. Now, with lower interest rates, utility providers are expected to restart these projects, creating a demand for right of way services to acquire easements and rights of way.
As these projects move forward, experienced right of way service providers like ORC will be essential in ensuring that land acquisition and other legal requirements are handled efficiently.
ORC’s Role in Supporting Infrastructure Growth
With more than 50 years of experience, ORC has supported more than 20,000 infrastructure projects across the U.S. Our expertise spans land acquisition, project management, stakeholder communications, and regulatory compliance, all of which are essential to ensuring that infrastructure projects are completed on time and within budget.
How ORC Can Assist Public and Utility Sector Clients
As infrastructure projects pick up pace due to lower interest rates, ORC is ready to help both public and private clients resume long-delayed projects. From highway expansions to utility upgrades, ORC’s tailored right of way services ensure that land acquisition is handled smoothly, keeping projects on track.
Long-Term Implications for the Right of Way Industry
Sustained Infrastructure Investment Trends
The long view suggests continued investment in infrastructure may persist as long as interest rates remain low. Agencies and utilities that had previously been cautious about long-term projects may now be more willing to commit to capital-intensive infrastructure investments, sustaining the demand for right of way services well into the future.
Future Policy Impacts
The future trajectory of interest rates will be key to determining the longevity of this infrastructure surge. If rates remain low, we can expect continued growth in infrastructure projects requiring right of way services. However, any future interest rate hikes could once again slow investment, creating challenges for public agencies and utilities.
As a leader in the right of way industry, ORC is well-positioned to support these projects by providing comprehensive services that ensure land acquisition and project management are handled efficiently. By staying ahead of economic trends and understanding the implications of policies like interest rate cuts, ORC continues to reinforce its status as a thought leader and trusted partner in the right of way industry.
Ready to learn more about how ORC can help your next infrastructure project? Contact us today to see how our right of way services can make your project a success!