Hurricane Politics and the Real Estate Industry

WASHINGTON, DC-The one benefit of the hurricane--a pick-up in construction employment due to the cleanup--is not likely to deliver much of a boost, Associated General Contractors of America economist Ken Simonson tells GlobeSt.com. "It will not lead to immediate work for clean-up crews or any kind of employment stabilization," he says. "Most of the real construction work takes months or years at any rate and will not provide a short-term boost. In some cases, business and property owners will decide it is not financially viable to rebuild."

Meanwhile, Hurricane Irene may have spared the Washington, DC region but it certainly laid bare its barely disguised partisan divide. Already there is sharp debate over how to pay for the disaster relief, with Republicans insisting aid be met with spending cuts elsewhere.

Of greater interest to the commercial real estate industry is the national flood-insurance program, which is run by the government. Tension over paying the aid is exacerbating the long-standing debate over the government’s role in this program. The commercial real estate industry had to white-knuckle the same back-and-forth when some in Congress dragged their heels on the terrorism insurance backstop. The national flood insurance program is due to expire on Sept. 30, and few expect Congress to come to a long-term settlement by then, the Wall Street Journal reports. A short-term agreement is likely to be forged, but if it isn’t the insurance companies will be on the hook.