3 Government Actions that Will Affect CRE

During the past year we have seen many changes with government policies that have taken the country by storm. From

health care reform and government shutdown to new tax incentives; all affecting commercial real estate in a variety of ways. Learn about three specific government actions will affect CRE:

1. Health Care Reform

The Affordable Health Care Act is expected to expand health care services by 30-50 million more people.  The growth in insurance has increased the demand for medical office spaces, facilities, pharmaceutical manufacturing, medical devices, industrial space, and drug stores. As this article details, this has been exciting for many commercial real estate professionals as doctors and healthcare providers are now being forced to accommodate these new policies, by moving to newer, bigger and more custom designed spaces. Doctors and brokers will be highly sought after to answer the demands for a growing industry that now has different rules. Read about how Block Healthcare Development is addressing these changes to the business landscape. 

2. Government Shutdown

In October, the government shutdown hit the housing real estate market harder than the commercial side...at first. However, in this Kansas City Business Journal article, Block Real Estate's Managing Principal Ken Block, brought to light some of the headaches that the that commercial real estate professionals have faced due to the government shutdown: "For example, the (U.S. Army) Corps of Engineers closes Friday, so all permits and deals currently in process go into limbo until they open up again. There are many instances of this with leases and sales and other deals in process with any government agency."

Luckily, the government shutdown did not last long. However, it did bring commercial real estate business temporarily to a sluggish crawl and could continue to affect the real estate market recovery. 

3. Tax Incentives

Borrowers continue to struggle with Banks who are hesitant to lend. However, reimbursement incentives such as historic tax credits and others have been available to help developers find new, creative ways to fund and rehabilitate historic property. These tax credits have allowed many investors to cover gap costs and update properties that are in disrepair. As this CCIM article discusses, property owners can use these tax credits to offset federal and state tax liabilities,or they can “sell” tax credits and use the capital to offset rehabilitation costs.

For better or for worse, government actions continue to affect the commercial real estate industry. Keeping an eye on how these three government actions will play out in the market will better prepare you for what 2014 may bring.

Contributor:

Kenneth G. Block, SIOR, CCIM
Managing Principal
Block Real Estate Services
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