WASHINGTON, DC-It’s all done now except for the partisan bickering. President Barack Obama delivered his State of the Union address Tuesday night, committing to many hot button issues as gun control and elder care.
A number of topics on the list would directly or indirectly impact the commercial real estate market, topics that range from tax reform and jobs creation to repairing the failed infrastructure of our cities. The president made little mention of the District itself, but that doesn’t mean the city and surrounding areas won’t be impacted for both better and worse.
In the case of the latter, there is the ongoing budget clashes and sequestration. “It is clear there will continue to be a pitched battle over the next couple of years regarding spending,” Kevin Wayer, co-president of Public Institutions Group at Jones Lang LaSalle, tells GlobeSt.com.
“We expect that there will be a series of confrontations between the Administration and Congress in dealing with spending versus revenue and that will create a lot of ups and downs and uncertainty in DC market.”
To be sure, this is a serious issue for DC. But the speech held some bright spots as well.
Demand for More Space. To state the obvious, whenever a president issues a call for new spending or development that translates into some kind of local demand component. Obama called for initiatives in infrastructure, energy, immigration and cybersecurity, all of which could create demand for more office space.
More Dispositions. The government will continue its razor focus on savings – a push that will include the continued disposition of properties such as the Georgetown Water Plant (although with no bidders perhaps that is not the best example).
New Tech Mini-Hubs. Many of the initiatives the Administration is proposing will require more tech investment, Wayer says. The president proposed a one-time $1 billion investment to create a network of 15 manufacturing institutes across the country. More immediately, he said he will act by executive authority to launch three new manufacturing innovation institutes this year through a co-investment of existing resources between the Departments of Defense and Energy, along with new commitments from the private sector. “We could see the regeneration of older submarkets in response,” Wayer says. One model is the St. Elizabeth’s campus and its second life with the Department of Homeland Security, he says.
More Foreign Investment. Foreign-based real estate investors like Washington DC, despite the clashes between the Capitol and the White House. President Obama wants to expand the Department of Commerce’s efforts to promote business investment and as part of these efforts, the Administration will host a SelectUSA Investment Summit this year, matching businesses from around the world with local leaders.