News
What Will Happen? Presidential Election 2024 Trump vs Harris
Today is election day 2024. It is the day of the 2024 presidential election in which voters decide between their options to be the next President of the United States. The person they hope will help shape their perception of a better and dreamingly ideal place to live their life. At least that is how it used be, or is supposed to be.
Elections have always been naturally competitive, heated at times, full of debate, laced with diverse tactics, and have include questionable information on which voters are to base their decision. Today though, it seems a little less about a pursuit of putting the most qualified candidate in the position, and more about a preventative process to eliminate the other candidate simply for the sake of doing so. Be sure to vote today. Vote with the thought of who can make your overall life better. Not a single aspect that may or may never come to fruition, or may never genuinely apply to you, but vote for the candidate who can make your overall life better.
Commercial real estate and presidential elections
It is no secret that commercial real estate directly relates to the economic status of our country. There is an impression that election years bring about a lot of uncertainty, and in many ways they do. The studies of CBRE indicate that there is not as much immediate impact on CRE within the election year as perceived though. It is possibly what follows inauguration that does. Prosperity facilitates the needs and wants for goods and services which are at the core of demand for commercial space. What are some indicators of prosperity and a thriving economy?
- Low/moderate interest rates
- Low/moderate inflation
- Low unemployment
- High GDP
- High consumer spending
- Strong housing market
When these categories are thriving, “business is good” which means companies are growing. Those companies need land. They need office space even in a remote working environment. Retail stores are expanding. Restaurants are opening. Cities experience growth. CRE does well, so what the future will be after the election partially relates to a candidate’s policies that help fuel this environment.
Interest rates post-election
While a president does not solely determine interest rates, the President’s policies do eventually have effects on the economic conditions of the country. That relationship does in fact play a key role on how interest rates fluctuate. Poor policies that allow the economy to get out of control will trigger rising interest rates. That capital becoming more expensive slows the investment in CRE, so through a domino effect a president can affect commercial real estate activity.
Infrastructure spending
Whether it be for updating or expansion, government spending has an effect on commercial infrastructure development. This may be in the traditional form of roads and bridges, or through facilitating rebuilding after natural disasters. Decisions on government funding for such projects are not solely at the President’s discretion, but also includes decisions made by Congress, so the outcome of how an election affects this type of spending also includes changes to the control of Congress.
Housing market indicators
Few will dispute that the housing market has not been the same since the years of the pandemic. A huge surge in demand (opposite of what was expected) drove pricing to new and record levels in many areas. Inventory remained low. This was followed by years of high inflation keeping many buyers on the sidelines waiting. Sellers have also chosen to stay put as they fear not finding a home, and their current interest rates were so low. These have contributed to a housing market environment that is defined by high inflation, high interest rates, low inventory, and a buyer pool who is “waiting to see what happens”.
Taxes in CRE
As any experienced CRE investor will tell you, some of the benefits of developing commercial real estate include the tax advantages and incentives. One such example is the 1031 exchange that allows the investor to defer capital gains taxes. This allows the continued investment of those funds rather than immediately paying the taxes (which become due later). Having an administration at the federal level that is tax-friendly is critical to the operation of commercial real estate investors/developers.
How will policies will affect CRE?
In this particular election cycle, neither candidate has provided many specifics on their policies. This of course makes it difficult for voters and investors to make predictions about how future actions will affect them. That being said, this election does present a unique scenario though. Both candidates have White House track records. Harris is the current Vice President, and has been since 2020, and Trump was President 2016-2020. This unique scenario does allow voters a peek into how each may perform as the future President, and how their track record of policies and actions of the past may affect an investor’s environment in the near future.
What will the outcome be?
If only we had a crystal ball to provide some insight to the results. It is only mid-day, and the popular opinion is that it may require a few days to actually confirm the results (not the first time that has occurred). From a CRE investor’s perspective, the industry needs a President who will get inflation under control, cause interest rates to trend downward, create jobs, increase GDP, and bolster the home-buying environment for the population, but at the same time has a vision to make overall life better for the citizens of the United States of America.
