Washington CRE Fares Better Under Republican Rule

WASHINGTON, DC-The commercial real estate initiatives of this city and surrounding area, not the political entity otherwise known as the nation’s Capital—seems to fare better when Republicans control both sides of Congress. That is the eyebrow-raising conclusion of a CBRE study—a finding that surprised the report authors as well. “We weren’t expecting the numbers to be so lopsided,” Marianne Swearingen, CBRE research manager, tells GlobeSt.com.

CBRE found that over the past 20 years, when Republicans were in control of both sides of Congress, there was 78.5 million square feet of existing and new construction absorbed, or 7.8 million square feet on average, in every year they were in control.

When the Democrats controlled Congress, some 17.9 million square feet were absorbed, or 2.5 million annually, on average. When Congress was divided, those numbers clocked in at 515,049 square feet and 128,762 square feet per year.

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Of course, background events play a huge role in these numbers—and these events are not necessarily seen as good for the industry when they happen. For instance, Swearingen points out that in the 1990s when Republicans were in control of Congress for much of the Clinton Administration, the federal government was dramatically downsized—which turned out to be a very good thing for the local real estate market.

“A lot of those federal employees were turned into government contractors and that growth gave rise to such markets as Crystal City,” Swearingen says. Also, during the mid-2000s, there was the creation of the Department of Homeland Security and two wars fought in Iraq and Afghanistan, both of which helped the local commercial real estate market. The last 15 months—a period when Congress has been not only divided but bitterly so—have been the worst for the area since 1992.