House Speaker Mike Johnson (R-LA) announced this afternoon that the House will vote tonight on a revised version of the bill that was defeated on Thursday, excluding the debt ceiling provision advocated by President-elect Trump. (Politico, Live updates)

Latest Funding Plan

• Under the House GOP’s latest plan, the government would be funded until March 14. It includes a one-year farm bill extension and the $110 billion disaster aid package. (The Hill, Dec. 20) (Latest CR-3rd Version, Dec. 20)

• On Thursday, Democrats and a group of Republicans rejected a second Continuing Resolution (CR) proposal in a decisive 174-235 vote, which fell short of the two-thirds majority needed under expedited rules.  (Axios, Dec. 20)

• Elon Musk and President-elect Trump amplified tensions in Congress, urging Johnson to abandon the bipartisan agreement he reached with top Democrats in favor of a Republican-preferred measure earlier in the week. (AP, Dec. 20)

• By rejecting the Trump-endorsed proposal, Democrats signaled they would not support legislation unless they were included in negotiations.

Roundtable Urges National Flood Insurance Program (NFIP) Extension

• The Roundtable and 11 other organizations wrote to Congressional leadership urging swift action to extend the National Flood Insurance Program (NFIP) before its December 20 expiration. (NFIP Letter, Dec. 20)

• The letter emphasized the urgency of passing the “NFIP Extension Act of 2024” in the event of a government funding lapse. This legislation, already introduced in both the House and Senate, would extend the NFIP through September 30, 2025, ensuring continuity and aligning the program with the end of the fiscal year.

Debt Ceiling

• House Republican leaders unveiled a plan this afternoon to raise the debt ceiling by $1.5 trillion in early 2025, paired with $2.5 trillion in cuts to mandatory spending. (Politico, Dec. 20)

• GOP leaders aim to use the reconciliation process next year to pass these measures with a simple majority vote in the Senate, bypassing the filibuster. The proposal directly challenges President-elect Donald Trump's demands for immediate bipartisan action to raise the debt ceiling.

• GOP leaders hope to leverage this budget tool to achieve major policy goals, such as increased border security and expiring tax cuts, but face challenges in rallying the slim majorities they will have in both chambers when the new Congress is sworn in. (Politico, Dec. 20)

What’s next: The GOP plan sets the stage for a contentious fiscal battle in 2025, as the party grapples with how to balance its policy priorities against the looming threat of economic fallout.

The Federal Reserve reduced its benchmark interest rate by a quarter percentage point Wednesday, bringing it to a target range of 4.25% to 4.50%. While the cut provides some relief to borrowers, the central bank signaled a more cautious pace for future rate reductions as inflationary pressures persist. (Axios, Dec. 18)

Why It Matters

• The Fed’s decision reflects its effort to balance slowing inflation with a resilient economy.

• Powell cited recent data, and not just potential policy changes, justified an adjustment to the inflation forecast. Additionally, the labor market has proven more resilient than officials anticipated when they began rate cuts in September. (WSJ, Dec. 18)

• "We are at or near a point at which it will be appropriate to slow the pace of further adjustments," Fed chair Jerome Powell told reporters at a press conference on Wednesday, referring to the decision to cut rates. (Press Conference, Dec. 18)

• The Fed’s latest quarterly projections suggest a slower path to lower rates, with officials anticipating only two rate cuts in 2025, down from four or five predicted in September. (AP News, Dec. 18)

• Beth Hammack, President of the Cleveland Federal Reserve, dissented from the decision, advocating for steady rates.

Looking Ahead

• The incoming Trump administration is expected to pursue policies such as deregulation, tax cuts, and a growth-focused agenda.

• While policies like deregulation and tax cuts could stimulate growth, tariffs and deportations threaten to exacerbate inflationary pressures.

• Fed Chair Jerome Powell noted that some officials have started factoring in "highly conditional estimates" of the potential economic impacts of Trump administration policies into their forecasts.

• The Federal Open Market Committee (FOMC) emphasized that further cuts would depend on incoming data, stating it will assess “the extent and timing” of future adjustments. (Summary of Economic Projections, Dec. 18)

• The Fed now projects inflation to reach 2.5% in 2025, higher than its September forecast of 2.1%, reflecting expectations of slower progress in curbing price increases. (CBS, Dec. 18)

• For CRE, adaptability remains key as the macroeconomic environment evolves.

The Fed’s next meeting will be January 28-29, 2025, a week after inauguration, and RER’s all-member State of the Industry (SOI) Meeting on January 22-23. 

As 2024 comes to a close, the commercial real estate industry has made significant strides in recovery and adaptation.

2024 Roundtable Highlights

• Over the past year, industry confidence has rebounded. RER’s Q4 Sentiment Index reached 73—a three-year high—and a 12-point jump from Q1 of this year. Despite ongoing challenges, the industry has demonstrated resilience and emerged stronger.

• RER President & CEO Jeffrey DeBoer spoke about the industry’s 2025 priorities in a recent episode of the Leading Voices in Real Estate podcast, saying, “Real estate cuts across all aspects of our economy, and it’s what makes cities strong. You can't find a time in history where nations have been strong without healthy cities. Right now, cities are struggling, and we want to help them back.”

• Looking ahead to 2025, RER remains focused onadvancing policies that support liquidity, innovation, and adaptive reuse to ensure CRE remains a pillar of economic growth and community development.

• 2025 Policy Priorities Survey: Next week we will be distributing our Policy Issues Survey to all members to gather input on our policy priorities for 2025.

Top Takeaways from 2024

• Key drivers of the industry’s growing confidence include easing interest rates and improving financial conditions, which have helped to stabilize asset values and encourage investment activity. By year-end, easing monetary policy and growing investor confidence have started to open up capital availability, with more progress expected in 2025. (Roundtable Weekly, Nov. 8)
  
  
• Office-to-residential conversions saw a banner year, with more than 70 projects completed in 2024. Bolstered by the growing number of state and local incentive programs, 71 million sq. ft. (1.7% of U.S. office inventory) was undergoing or planned for conversion​ as of Q3. Property conversions will continue to see growing momentum in 2025, helping to alleviate elevated vacancy rates. (CBRE, Nov. 11)
  
  
• Loan modifications and extensions, encouraged by regulators and supported by RER, have helped many distressed owners stabilize properties and avoid defaults. While 2024 was a challenging year for the office sector, markets have started to reach an inflection point as capital becomes more available, vacancy rates start to peak, return-to-office momentum grows, and transaction activity picks up. (Roundtable Weekly, Nov. 15)
  
  
• Meanwhile, multifamily and industrial assets—especially data centers—continued to demonstrate strength, benefiting from robust tenant demand and the rapid expansion of AI-driven technologies. (CBRE, Dec. 11)

Prospects for 2025 and Trends to Watch

• Economic growth: The CRE sector is poised to benefit from moderate economic growth and a more favorable interest rate environment. Investors are cautiously optimistic about improving liquidity and stabilizing valuations, which could unlock much-needed capital. (Commercial Observer, Dec. 10, CBRE, Dec. 11)
  
  
• Office recovery: In San Francisco, office vacancy rates have dropped for the first time in four years—a sign that the office sector is beginning to turn the corner on the pandemic-era economy. Conversion activity is also expected to remain robust, supported by state and local incentives. (S.F. Chronicle, Dec. 16, GlobeSt., Dec. 17)
  
  
  • As RER Chair Emeritus William C. Rudin (Co-Executive Chairman, Rudin) recently told Squawk Box, “the demise of office and New York City are greatly exaggerated…there is capital, the CMBS market is back, the banks are coming back to the market,” indicating a welcome trend that could help drive an office revival across America’s downtowns.
    
    
• The data center market will likely see explosive growth driven by artificial intelligence and cloud computing, although power constraints may limit development. Demand for data centers is expected to grow 160% by 2030, driving the buildout of the physical infrastructure needed to support the next digital revolution. (Goldman Sachs, May 14) (McKinsey, Oct. 29)
  
  
• Political and regulatory shifts following the 2024 election—including potential changes to trade, immigration, and fiscal policies with a new Congress and presidential administration—could pose new opportunities or risks in 2025.  Collaborating with and educating policymakers on the impact these policies have on real estate will be crucial to ensuring that public policies support economic growth, job creation, housing affordability, and industry stability.
  

Heading into 2025, RER will continue advocating for policies that strengthen economic growth and capital availability while addressing industry challenges, including expanded tax credits for affordable housing and property conversions, permitting reform, and other initiatives that support a vibrant and resilient CRE sector.

Elizabeth “Liz” A. Hoopes retired on December 1, 2024, after a distinguished 42-year career with the National Realty Committee (NRC) and The Real Estate Roundtable.

• Liz began her career with NRC in December 1982 as Systems Administrator, where she was instrumental in implementing and managing the foundational technology and membership database systems.

• In 2015, she was promoted to Director, Information Systems, overseeing all technology infrastructure and providing critical support and solutions to ensure seamless operations at The Roundtable.

• For the past forty years, Liz managed The Roundtable’s Political Action Committee (REALPAC), facilitating all donations, FEC reports, filings, compliance requirements, and more.

• Recognizing her dedication, professionalism, and unwavering commitment to The Roundtable staff and membership throughout the years, the Board of Directors honored Liz with an engraved glass piece at our Fall Meeting last month.

• Roundtable President & CEO Jeffrey DeBoer remarked, "Liz’s exceptional work ethic, focus, and dedication are unparalleled, making her truly irreplaceable. Her hard work in so many areas over the years has been invaluable and has helped the Roundtable achieve its mission.  We wish her continued success, happiness, and good health in the next chapter of her life.”

• The Roundtable proudly acknowledges her significant professional achievements and congratulates her on her well-deserved retirement.

We are honored to have called her a friend and colleague all these years and wish her a wonderful retirement.

The Roundtable’s policy news digest will resume publication on Friday, January 10, 2025

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