Elections bring with them televised debates and yard signs. But what do election seasons mean for your commercial real estate?
The commercial real estate market historically favors buyers over sellers during election years. Buyers benefit because property values appreciate at slower rates during election years. In upcoming elections, we will likely see marginal increases in sales prices and a decline in the total number of property sales.
These changing market conditions parallel the slowing of the general U.S. economy during election years. An election—especially a close one—brings uncertainty, and uncertainty affects the economy. People fear the unknown and are wary to invest in major purchases until the election passes. They’ll wait to see how the new administration affects trade policies, interest rates and tax deductions.
Commercial real estate real estate developers, brokers, owners and investors understand these trends, as shown by the biannual survey conducted by NAIOP. Shortly before the 2016 election, survey respondents had a more negative market outlook. They anticipated slowing employment growth, lower occupancy rates and less available debt. In contrast, respondents to the Fall 2018 survey predicted market expansion due to more available capital and debt.
The market in upcoming election years will likely continue the cycle of previous election years. As a property owner, you may consider putting your property on the market before the economy slows during the election year. Contact a member of our leasing and sales team to get started.