{"id":729,"date":"2021-03-30T08:23:14","date_gmt":"2021-03-30T08:23:14","guid":{"rendered":"https:\/\/www.yardimatrix.com\/blog\/?p=729"},"modified":"2023-02-17T09:46:46","modified_gmt":"2023-02-17T09:46:46","slug":"how-will-free-spending-government-impact-the-cre-market","status":"publish","type":"post","link":"https:\/\/www.yardimatrix.com\/blog\/how-will-free-spending-government-impact-the-cre-market\/","title":{"rendered":"How Will Free-Spending Government Impact the CRE Market?"},"content":{"rendered":"<p>The 2020 election and the economic hardship of COVID-19 have come together to produce the most \u201cprogressive\u201d economic policy in decades \u2013 what does that mean for commercial real estate?<\/p>\n<p>The U.S. federal government has passed an unprecedented $5.3 trillion of stimulus as part of the effort to recover from the COVID-19 pandemic. Trillions more of infrastructure spending appears to be on the way, with President Joe Biden to announce details on Friday.<\/p>\n<p>Democrats won control of the presidency and Congress in the November elections, but with the thinnest margins ever. Consequently, there is an urgency to work quickly because the majority could be gone in 2022, or even sooner if a Democratic senator must be replaced. At the same time, the economic havoc created by the pandemic has removed much of the concern about deficit spending that held back Democratic spending when they controlled the agenda in previous decades.<\/p>\n<p>The \u201cgo big\u201d spending packages are expected to help produce a rapid recovery, with GDP forecast to grow by 6.5 percent in 2021 and 4.0 percent in 2022, according to the Organization for Economic Cooperation and Development. If those projections come to pass, it would mark the strongest recovery since the economy grew by 4.6 percent in 1983 and 7.2 percent in 1984 following a recession in 1982.<\/p>\n<p>\u201cIt\u2019s going to be a big jolt for the markets,\u201d says Andrew Nelson of Nelson Economists, the former chief economist for Colliers International. \u201cThere are big upside implications for the country and property markets.\u201d<\/p>\n<p>The gain for commercial real estate doesn\u2019t come without potential pain. Rapid growth from stimulus-fueled consumer spending creates concerns about an exploding federal deficit, a rapid increase in inflation, and rising Treasury rates. Such conditions could produce an increase in the cost of capital, and potential for lower returns and distressed debt in commercial real estate. \u201cMy sense is that if we see growth in inflation, it won\u2019t be incremental,\u201d said Donald Sheets, a managing director at Broadsheet Capital Partners. \u201cIt will be like a fire that spreads quickly.\u201d<\/p>\n<p>In the short term, though, the economic consensus is that <a href=\"https:\/\/www.yardimatrix.com\/blog\/covid-cash-kicks-off-new-policy-era-for-cre\/\">the relief spending<\/a> is preferable than the cost of inaction. More than 70 percent of economists surveyed by the National Association for Business Economics (NABE) this month believe current monetary policy is \u201cabout right,\u201d and only a quarter of respondents views current Fed policy as \u201ctoo stimulative.\u201d<\/p>\n<p>The full analysis can be found here: <a href=\"https:\/\/www.commercialsearch.com\/news\/analysis-big-govt-spending-creates-opportunities-worries-for-cre\/\">https:\/\/www.commercialsearch.com\/news\/analysis-big-govt-spending-creates-opportunities-worries-for-cre\/<\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The 2020 election and the economic hardship of COVID-19 have come together to produce the most \u201cprogressive\u201d economic policy in decades \u2013 what does that mean for commercial real estate? The U.S. federal government has passed an unprecedented $5.3 trillion of stimulus as part of the effort to recover from the COVID-19 pandemic. Trillions more [&hellip;]<\/p>\n","protected":false},"author":463,"featured_media":730,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[248,23],"tags":[313],"class_list":["post-729","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commentary","category-studies-and-guides","tag-stimulus-package"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v24.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Will Free-Spending Government Impact the CRE Market? - Yardi Matrix Blog<\/title>\n<meta name=\"description\" content=\"The 2020 election and the economic hardship of COVID-19 have come together to produce the most \u201cprogressive\u201d economic policy in decades.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.yardimatrix.com\/blog\/how-will-free-spending-government-impact-the-cre-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Will Free-Spending Government Impact the CRE Market?\" \/>\n<meta property=\"og:description\" content=\"The 2020 election and the economic hardship of COVID-19 have come together to produce the most \u201cprogressive\u201d economic policy in decades.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.yardimatrix.com\/blog\/how-will-free-spending-government-impact-the-cre-market\/\" \/>\n<meta property=\"og:site_name\" content=\"Yardi Matrix Blog\" \/>\n<meta property=\"article:published_time\" content=\"2021-03-30T08:23:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-02-17T09:46:46+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.yardimatrix.com\/blog\/wp-content\/uploads\/sites\/39\/2021\/03\/minneapolis-926411_1920.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1279\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Paul Fiorilla\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Paul Fiorilla\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"How Will Free-Spending Government Impact the CRE Market? 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He previously served as a vice president of research at Prudential Real Estate Investors in Madison, N.J., where he oversaw publishing of outlooks and thought leadership research. Before that, he covered real estate capital markets and CMBS at Commercial Mortgage Alert.","url":"https:\/\/www.yardimatrix.com\/blog\/author\/paul-fiorilla\/"}]}},"jetpack_featured_media_url":"https:\/\/www.yardimatrix.com\/blog\/wp-content\/uploads\/sites\/39\/2021\/03\/minneapolis-926411_1920.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/posts\/729","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/users\/463"}],"replies":[{"embeddable":true,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/comments?post=729"}],"version-history":[{"count":2,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/posts\/729\/revisions"}],"predecessor-version":[{"id":1834,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/posts\/729\/revisions\/1834"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/media\/730"}],"wp:attachment":[{"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/media?parent=729"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/categories?post=729"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.yardimatrix.com\/blog\/wp-json\/wp\/v2\/tags?post=729"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}