By Shawn Stoneburner, Cushman & Wakefield Email 239.489.3600
With election day now behind us, it’s important to understand how the election results may impact commercial property. A predictable pattern has emerged in the commercial real estate market. As with every election year, we’re facing a high degree of uncertainty about what lies ahead, and that uncertainty typically sparks a “wait and see” attitude among investors because of a fear of the unknown.
Research shows us that there’s really no reason to let fear drive us to wait and see what happens. Whether the occupant of the White House wears a red or blue necktie actually has little traditional impact on the commercial property market. History shows us that even a dramatic shift in the presidency or congress doesn’t necessarily mean disorder or turmoil are on the horizon.
“Commercial property has performed well under both parties,” says Kenneth McCarthy, Principal Economist with Cushman & Wakefield. “Since 1979… property index returns have averaged better than 8.5% annually under various democratic and republican administrations.”
Obviously, the results of the election matter to each of us individually, but there are more significant factors for commercial property buyers and sellers to consider when evaluating their options. The market cycle, interest rates, employment levels, geopolitical events, Gross Domestic Product (GDP) and consumer spending, as well as the pandemic, can all impact commercial real estate pricing levels and transactions. And while the political makeup of Washington, D.C. can influence each of these factors, the sheer number of variables in play prevents drastic change in the market even when there’s drastic change inside the Beltway.
For example, a democratic administration could raise corporate taxes and reduce overall earnings. But that same administration might modify trade relations with our foreign partners and improve our nation’s GDP. Conversely, a republican administration may improve corporate bottom lines by lowering taxes on businesses. At the same time, those tax cuts could reduce available federal funding for the infrastructure needed to support growth. There are simply too many variables at work to make a significant short-term impact.
Regardless of these facts, we will still face a period of election-related uncertainty in the real estate investment market. In 2020, this “wait and see” period could be longer than usual, with some Senate races still undecided and results of the presidential election are challenged in a number of lawsuits.
It would be a mistake to look at this uncertain period as a negative and let fear keep us from moving forward. In many ways, this is actually a period of opportunity. The hesitation builds pent-up demand for commercial property, and at the same time means there’s less competition while other sellers wait to see how the situation will shake out.
This supply constraint, paired with repressed demand, drives quicker sales and higher prices. If you’re considering selling a commercial property, this is a great time to consult with a broker about how to take advantage of the current market. With interest rates still at historic lows and the Southwest Florida population continuing to climb, buyers are ready to jump into the market. The sooner your property is on the market, the better positioned it will be to sell.
The professionals at Cushman & Wakefield Commercial Property Southwest Florida are an excellent resource as you consider your options. Cushman & Wakefield’s brokers have extensive local market knowledge and best-in-class data and analytics to guide your decision-making. Contact us for a complimentary, no-obligation property valuation by calling 239-829-5400.