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SIORs See Slow Growth Continuing in Wake of
the Election; Second Half Looks More Promising
The re-election of President Barack H. Obama, while elimi- nating some of the uncertainty that has been plaguing the business community and thus the commercial real estate industry, will not lead to any immediate improvement, say
SIORs. However, several are optimistic that things will pick up in
the second half of 2013.
“Locally, I think his re-election will have a negative effect as far
as hiring–especially in our market, where we have the highest unemployment in the country,” says Soozi Jones Walker, SIOR CCIM,
president of Commercial Executives in Las Vegas, NV. “Without
jobs there is no need for commercial real estate; you need jobs to fill
the vacancies we have,” she adds.
“In general, I think the business community is still trying to wrap
its hands around this question,” adds Jeff Hoffman, SIOR, CCIM,
vice president of Judson & Associates, s.c., in Peewaukee, WI. “In
the near term I believe that we are going to see stagnation within
the marketplace as the business community is met with the likely
prospects of more regulation, taxation, and the Affordable Care Act.
There has been much consternation about regulations such as Dodd/
Frank and the Affordable Care Act; however neither of them has
really been rolled out yet.” Dodd/Frank, he notes, is “a massive reg-
ulatory overhaul of the financial sector that even financial industry
experts have a hard time explaining.” He says the energy sector also
faces uncertainty “from an EPA that has promoted an agenda against
carbon based energy and an interest in wrestling regulatory powers
of the fracking industry away from the states.”
However, Hoffman does believe things will look brighter for the
second half of the year. “Once the landscape of the second term of
President Obama starts to take shape I am expecting businesses to
start spending again,” he predicts. “While there are certainly many
challenges that are facing the U.S. economy, I believe that the mas-
sive stockpile of idle cash, combined with record low interest rates,
will push the Fed will ensure with a perpetual QE policy. The busi-
ness community, adjusting to the hand that it has been dealt, will
make appropriate investments within their business units as the
alternative to sitting on that cash–which makes little sense. The U.S.
is also in the midst of an energy boom, that according to the IEA,
could lead to energy independence for the U.S. by 2020. This has
the potential for a huge positive impact on the industrial real estate
market as cheap natural gas is a critical element to manufacturing
operations–and there are also countless manufacturing suppliers to
the shale industry that stand to benefit.”
Walker believes the fact that since the election was so personal,
it has left many in the business community with a lethargic attitude.
“They are a little wiped out; it will take the first six months to get
our sea legs back–to at least say that we know where we’re going, so
let’s get on with business,” she shares. “There’s a decision-point that
comes with stability–whether you like it or not–and then things can
Meanwhile Danny Zelonker, SIOR, CCIM, Broker Associate
with Mizrach Realty Associates in Miami, actually saw some short-
term positive impact from Obama’s re-election. “It’s been helping
me because capital gains looked to be going from 15 percent to 23. 8
percent, so we closed a lot of deals before December 31,” he notes.
In fact, he adds, he has personally cashed in two or three of his mort-
gages in order to pay a lower capital gains rate. “This was a record
year for me in commercial real estate; we did as much in the last
month as in the beginning of the year,” notes Zelonker.