Key Takeaways: Impact of the New Congress on Commercial Real Estate
Ballard Spahr recently hosted an event at the Metropolitan Club in Washington, D.C. to discuss the impact of the new Congress on the commercial real estate space. The event was moderated by Washington, D.C.-based David L. Winstead of Ballard Spahr, with welcoming and closing remarks by Kelly M. Wrenn and Roger D. Winston. Panelists included:
- Paula Cino, VP for Construction, Development, Land Use and Counsel at National Multifamily Housing Council (NMHC)
- Don Davis, VP of Advocacy for Building Owners and Managers International (BOMA)
- Jeffrey D. DeBoer, President and CEO of The Real Estate Roundtable
- Stephanie Milner, Associate VP of Multifamily Policy at Mortgage Bankers Association (MBA)
- Lisa A. Pendergast, Executive Director of Commercial Real Estate Finance Council (CREFC)
- Steven A. Wechsler, President and CEO of National Association of Real Estate Investment Trusts (NAREIT)
The group covered a wide range of topics, but one particularly consistent point was the increasing importance of advocacy. Recent elections have ushered in more than 80 new members of the House and Senate. Almost one-quarter of Congress has joined since the outbreak of COVID-19. Additionally, as Paula Cino noted, this Congress has put housing issues forward in a way that previous Congresses have not. There is increased need for resources devoted to educating lawmakers about the importance and value of investment in commercial real estate.
In an environment where mortgage rates and capitalization rates are both increasing, Lisa Pendergast explained, values are decreasing and liquidity is shrinking. This reality, in conjunction with what Steven Wechsler termed the "political risk" of increasing skepticism about the aggregation of capital—a requisite for real estate development projects—is a recipe for a number of challenges to the industry. Though each panelist was professionally focused on different sub-issues, each said they were heavily involved in education and advocacy efforts in Congress, and those issues will have a significant impact on stakeholders across the spectrum of commercial real estate.
Jeffrey DeBoer of The Real Estate Roundtable agreed that challenges are on the horizon, and explained that his organization is focusing on tax issues, utilizing the same strategy they have used successfully in the past with both Republican and Democratic Congresses: preparedness. He expects to spend the next year or so conducting extensive research and building relationships with new and old Congressmembers to ensure that The Real Estate Roundtable continues to be part of the ongoing conversation, as a voice for real estate owners, developers, lenders, and managers, as well as for the global economy.
Don Davis outlined some of BOMA's efforts to convince Congress of the value of moving to the center on sustainability issues. To this end, BOMA has been compiling resources for—and forging connections between—organizations and individuals seeking to create business models that increase profits by promoting sustainability, a topic on which BOMA hosted a symposium the following week. The organization also is supporting H.R. 6921, a bill that will provide $10.5 million in low-cost funding through the Small Business Administration for building owners to upgrade their building structures. By approaching the issue from multiple angles, the organization hopes to be a voice for sustainability that promotes healthy business practices.
Affordable and Multifamily Housing
The MBA, according to Stephanie Milner, is focusing its efforts on the multifamily space and, in particular, creating awareness of the need to increase the supply of affordable housing. The MBA supports a middle-income tax credit and federal incentives for property conversion. However, the organization also is concerned about the Administration's announcement on tenant protections and has been involved in conversations with the White House regarding those proposals.
Taken together, it is clear that the coming years will be critical ones in the commercial real estate industry. If you have any questions about the panel, or the topics discussed, please contact us. We will continue to monitor industry developments as the year unfolds.
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