US Election Could Have Big Impact on Commercial Market

Posted on 24 November, 2012 by Jodee Redmond

The recent US election will have a major impact on commercial real estate over the next several months. President Obama and Congress are getting ready to negotiate a solution to head off the fiscal cliff that has been making headlines recently by making major cuts to defense spending and social programs.

US President Barack Obama

The Bush administration’s tax cuts are due to expire shortly, and this fact is factored into the mix. Unless an agreement to slice $4 trillion from the country’s deficit is reached, the fiscal cliff will become a reality.

Commercial real estate analysts have been busy since the election trying to determine the winners and losers based on promises made by both candidates during their respective campaigns. The U.S. economy will end up being the big winner over the short term if both sides can agree a solution to avoid falling over the fiscal cliff. If no deal is reached, the economy will feel the impact of this failure.

Some analysts are predicting a period of slow growth for the economy in 2013, with acceleration later in the year and into 2014. Pent-up demand from consumers and corporations should be strong enough to keep the country from falling back into a recession.

Other commercial real estate analysts have stated the broad promises made by both candidates have paved the way for improvements in the office markets in cities with a large federal government presence. Investors should be on the lookout for opportunities in Washington D.C. San Diego, Baltimore, and San Antonio.

Not everyone is on board with these predictions, however. Christopher Macke at CBRE Global Research and Consulting states that office space in Washington D.C., San Francisco, New York, and Charlotte will lose in the Obama administration’s second term. Both candidates promised to make cuts to reduce the deficit, but Romney’s plans were so far reaching that demand for office space from lobbyists campaigning to save their programmes may have increased if he had been elected.

The fiscal cliff crisis brings a sense of urgency to the policy fights taking place in Washington. The President and Congress are under pressure to resolve the situation quickly, which could relieve the uncertainty over the federal budget if they are able to reach an agreement.




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