It’s a common theme when I ask commercial real estate brokers about the presidential election. No matter which candidate they support, they’re looking forward to the end of the campaign.
Why? Because companies tend to freeze up a bit during presidential election years. They want to see who’ll be in charge next year before making big business decisions. Hesitant businesses don’t exactly inspire steady commercial real estate activity.
So brokers, like the rest of us, are burned out by this election season that feels like it started in 2008.
I asked Josh Rikkers, principal with Cresa Madison, what impact he thinks the end of the presidential campaign will have on commercial real estate activity.
He had some good news: In his opinion, the steady recovery we’ve been seeing in commercial real estate is strong enough to continue no matter who takes the White House this November.
“In the short term – based on historical transactional volume during November and December – we should see a slowdown in the number of deals being done,” Rikkers said. “Long term, I think we will continue to see an uptick in leasing activity as markets continue to recover and vacancy rates continue to fall regardless of which candidate wins the presidency.”
Rikkers does, though, think a Romney presidency will have a very different impact on commercial real estate in at least one important way: when it comes to taxes levvied on capital gains.
“There is a strong difference of opinion and policy in terms of tax on capital gains. Mr. Obama’s plan includes a modest increase, calling for the capital gains rate to go up 5 percentage points, from 15 to 20 percent,” Rikkers said. “Mr. Romney has called for eliminating capital gains taxes for taxpayers with under $200,000 in income. Often, tax on capital gains directly and indirectly influences the level of interest, inventory, risk-aversion and overall volume of commercial sales.”
So what do you think? Tired of the presidential election? Think the commercial real estate recovery is strong enough to continue no matter who wins this November? And who do you want to see in the White House next year?
– Dan Rafter