WASHINGTON, DC-Skanska Chief Operating Officer Bill Brennan is blunt about the impact sequestration is having on the Washington DC area: "I am seeing little to no impact," he tells GlobeSt.com.
It's not that he doesn't think sequestration is having any impact at all. "My guess is that transactions that are more up front in the food chain ahead of us – a developer trying to finance a deal or come up with funding for example – is where the pain is being felt. Those types of transactions are a year out at least for us."
But that is hardly the end of the story. Brennan knows perfectly well that eventually the cuts will make their way to his spot on the food chain, as he puts it. Perhaps more significantly, what sequestration represents – an attempt by the government to reign in spending – is where the real impact will be felt in the region. Unfortunately, he says, Congress and the Administration are still not providing much guidance on that issue – and now that sequestration has been deemed a non-event with little ill effect by much of the population, it is unlikely they will.
"The bigger concern for us is where and how will these guys find the trillions in dollars they need to identify to scale back the national debt," Brennan says. "We need a clearer view of the long term."
It is this lack of a big picture that seem to bother DC area commercial real estate executives like Brennan the most—perhaps more so than, for example, single-digit RevPAR gains for a Washington hotel, or losing a government deal at a certain asset. Those sting, of course, but they are also part of the daily battle to stay competitive.
Brennan is not alone in his frustration. Another local CRE executive expressed his frustration to me recently with the misguided focus on sequestration throughout much of the country. "People are paying too much attention to just this year and what the cuts means. They see it is not having an impact so they think the story is over. In fact, I think a lot of people would be surprised to realize these are cumulative cuts over ten years."
And even that would be fine, this person continues, if a reasonable roadmap or plan were laid out for righting the fiscal ship. That hasn't happened, and as many view it, sequestration was the best opportunity to have that conversation. A lost opportunity as it is turning out.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
