X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-A rising tide lifts all boats is essentially the theory behind the $787-billion stimulus bill, which passed in Congress last week: the spending and tax cut package has been designed to jump start the economy, specifically consumer activity. Once that happens, other sectors of the economy–such as commercial real estate–will follow suit. For that reason, CRE executives are cheering on the bill’s success, if only because there are few if any other economic events on the horizon that promise to turn around activity.

The biggest impact the stimulus bill will have on CRE is that it will broadly stimulate the economy–which will then stem job losses and spur retail spending, Joel Harden, a Philadelphia real estate entrepreneur and developer, tells GlobeSt.com. “Office and retail occupancy levels will start to rise.”

To be sure, there are some real estate measures included in the bill, which are expected to deliver a boost. While many of these are aimed primarily at the residential markets–the increase in the first-time home buyer tax credit to $8,000; the bill also reinstates the 2008 higher loan limits for FHA, Fannie Mae and Freddie Mac.

There is more than $135 billion in construction and infrastructure investments included in stimulus legislation, according to the Associated General Contractors of America–which is expected to create or save 650,000 construction jobs and 300,000 positions in related fields such as equipment and material supply. An additional 970,000 jobs in the broader economy would also be created or supported by the investments.

Furthermore, AGC estimates that this $135 billion will increase personal earnings nationwide by $75 billion and add $230 billion to GDP. While much of this will be public sector development, a spokesman for AGC tells GlobeSt.com that there is also an expectation that opportunities for building will spill over into private sector.

Green development and the Northwest Corridor are also expected to receive boosts from the package, Harris Faberman, who heads the investment division for Freeman Myre, a Colorado-based commercial real estate brokerage firm, tells GlobeSt.com.

He notes that Pres. Barack Obama is signing the stimulus bill in Denver–in a museum that has a large photovoltaic array (PV) installed on the roof–partly to highlight Gov. Bill Ritter’s pledge to make Colorado the renewable energy center for the US. “Given President Obama’s focus on sustainability, efficiency and directing federal funds to promote these causes, the stimulus bill could have a strong impact on commercial real estate in this area,” he says.

Much of the debate that surrounded the stimulus bill, as it struggled through Congress, was centered around whether it would actually work. Fingers are crossed, of course, but in the meantime CRE companies would also do well to remain focused on short term survival strategies until the bill can impact the economy, Greg Womack, president of Womack Investment Advisers, tells GlobeSt.com.

“My suggestion for [building owners]–deal with mid-to-large size companies that have strong cash flow and balance sheets,” Womack says. “Go [for] longer term leases of 10 to 15 years; you won’t have to worry about re-signing properties in a tough market.”

He continues, “The commercial real estate market is feeling some pain from the credit crisis, some more severe depending on the region. Those management companies that buy and lease properties that are dealing with [tenants] that have strong balance sheets and good business models should fair well.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt. APARTMENTS SPRING 2021Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.