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Will Congress help or derail America’s commercial real estate recovery?

By HOM Editorial Team
February 2015

Fast Fact: Shopping centers, office buildings and other commercial real estate we count on every day have still not fully recovered from the economic crisis. Congress needs to ensure a full recovery.

When we talk about commercial real estate, we’re talking about the retail centers you shop in, the office buildings you or your loved ones work in, and the warehouses that create, store and distribute virtually everything you buy. Even rental apartments, hospitals, and hotels are part of the commercial real estate universe.

We all know how much our home values dropped when the real estate bubble burst, but did you know the value of commercial real estate also plummeted? And that, in many areas, commercial properties are still struggling to recover?

In 2007, U.S. commercial real estate sales totaled $576 billion dollars, but by 2009 that number had dropped to only $68 billion.

This year, sales are expected to reach over $400 billion, a big number, but still significantly less than before.

That’s partially because, in the years following the real estate crisis, it became difficult for owners, prospective buyers, and developers to find financing to build, buy, or renovate commercial properties. Maybe you’ve noticed less construction of new shopping centers and office buildings over the last few years?

The good news is that we expect more investment capital to flow into commercial real estate this year for several reasons, including:

Commercial real estate rents and vacancies are improving.
The slowdown in construction caused a pent-up need for more commercial real estate.
Stocks, bonds, and other non-real-estate investments have risen to heights some investors won’t pay so investors are re-entering the commercial real estate market.
Commercial mortgage-backed securities and lenders are also coming back.
Some policies are afloat in Washington that could ensure a full recovery. On the other hand, other proposals could cause serious setbacks for our nation’s commercial real estate recovery. You can help by telling Congress to:

Create a U.S. covered bond market, increase the cap on credit union member business lending (MBL), provide additional banking guidance related to commercial real estate loan term extensions, and improve credit availablility for small businesses. Many of these solutions already have a record of success in Europe and Canada.
Increase Small Business Administration (SBA) loan limits and refinancing for commercial real estate.
Avoid new lease accounting proposals that would reduce the borrowing capacity of many commercial real estate landlords and tenants alike.
You don’t have to be a commercial real estate investor to appreciate the contribution it makes to our economy and our lives. We all count on commercial real estate, one way or another, every day!

Let’s urge Congress to act now.


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