News Type: Roundtable Weekly

Biden Administration Floats Tax Increases to Pay for Infrastructure as Policy Focus Shifts to Economic Growth

Posted on by Trey Jackson
The White House
Biden Administration and The White House

The Biden administration is considering increasing the corporate tax rate and the individual rate for high earners as it deliberates how to structure its next major legislative initiative – a sprawling “Build Back Better” economic growth package that may cost far more than the $1.9 trillion coronavirus-relief bill enacted last week. (BGov, March 15 and Roundtable Weekly, March 12) 

Why It Matters: 

  • The first major tax increase since 1993 could be proposed as one method of funding Biden’s ambitious infrastructure plan. Heather Boushey, a member of the White House Council of Economic Advisers stated, “There is a long list of things that we need to invest in,” including “broadly defined” infrastructure, the power grid, and a plan to bolster child and elder care. (BGov and Bloomberg Television interview, March 15) 
  • Biden’s tax plan would aim to provide relief for middle-class households, including those in the $110,000-a-year income range, according to Bharat Ramamurti, deputy director of the White House National Economic Council. “The key here is that the president believes strongly that the biggest corporations and those folks who have done extremely well over the last several decades should pay a bit more,” Ramamurti said. (Bloomberg Television interview, March 16)
     
  • Senate Minority Leader Mitch McConnell (R-KY) this week rejected any potential tax increases to fund President’s Biden infrastructure plan. (The Hill, March 16)
     
  • Democrats are considering using the budget reconciliation process to pass an infrastructure bill, the same process used to pass the pandemic relief bill in the Senate by a simple majority in the 50-50 Senate. Under normal budget rules, the support of at least 10 GOP senators would be needed to defeat a 60-vote filibuster. Democrats will only be able to use reconciliation for one more bill this year. (The Hill, March 15)
  • The enormous scope of the administration’s legislative goals may lead to the possible separation of their economic growth package into as many as three bills. (Politico Playbook, March 18) 

Congressional Legislation:

  • Expanding allowable investment opportunities for REITs could increase private sector infrastructure and help revitalize distressed retail businesses. The Roundtable-supported, bipartisan Retail Revitalization Actof 2021 (H.R. 840) – introduced Feb. 4 by House Ways and Means Members Brad Schneider (D-IL) and Darin Lahood (R- IL) – would modernize real estate investment trust tax provisions to permit REITs to invest equity in struggling commercial tenants that have been harmed by the COVID-19 pandemic. (News release, Feb. 4)

     


  • H.R. 840 is the focus of a March 16 Tax Notes article entitled, “Modifying REIT Rules Could Aid Recovery and Infrastructure Plans.”
  • House Energy and Commerce (E&C) Committee Chairman Frank Pallone, Jr. (D-NJ) has scheduled a March 22 hearing on the committee’s recently released Leading Infrastructure For Tomorrow’s (LIFT) America Act, which would provide more than $312 billion in funding for broad range of projects. (E&C news release, March 11 and Chairman’s Memorandum, March 18)
  • House E&C Committee Republicans released a clean energy and climate package this week in response to the E&C Democrats’ LIFT legislation. (E&C Republicans news release, March 15)
  • Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY) on March 18 introduced the BUILD GREEN Infrastructure and Jobs Act, a $500 billion proposal to shift U.S. transportation away from fossil fuels by 2050. 

What’s Next:

  • More legislation is expected to be introduced that will focus on highways, mass transit and other surface transportation, as well as tax-related energy and infrastructure measures. House bills are expected from Transportation and Infrastructure Committee Chairman Peter DeFazio (D-OR) and Ways and Means Committee Chairman Richard Neal (D-MA).
     
  • A “by-the-mile” vehicle usage tax is also under consideration to fund transportation infrastructure projects. Transportation Secretary Pete Buttigieg is considering funding highway projects with a fee based on how many miles someone travels instead of how much gasoline they pump. Buttigieg has stated the administration will move swiftly to reauthorize the surface transportation highway bill, which is set to expire at the end of September. (BGov, March 15) 
  • The Roundtable is part of the Build by the 4th coalition, led by the U.S. Chamber of Commerce, which encourages the Biden Administration and the new Congress to pass a comprehensive infrastructure deal by Independence Day 2021. 

Infrastructure investment will be a focus of discussion between commercial real estate leaders and policymakers during The Spring Roundtable Meeting on April 20 in Washington, DC. 

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Infrastructure Legislation Next on Biden Agenda; Michael Regan Confirmed as EPA Administrator

Posted on by Trey Jackson

Infrastructure Dallas

The Biden Administration plans to move forward on its “Build Back Better” infrastructure initiative as the next legislative push to spur the economy after he signed the COVID-19 relief package yesterday. (CNBC, March 10 and New York Times, March 3)

Why It Matters

  • A $312 billion bill was introduced yesterday by House Democrats on the Energy & Commerce (E&C) Committee that would invest in clean energy, drinking water, broadband, and health care infrastructure. LIFT America Act (text, section-by-section analysis, press release).
  • House E&C Democrats last week introduced a sprawling climate change bill, the CLEAN Future Act, which includes provisions on building energy codes, energy benchmarking, and SEC public company reporting on climate risks. (Roundtable Weekly, March 5)
  • More bills are forthcoming on matters addressing highways, mass transit and other surface transportation, as well as energy and infrastructure tax-related matters. In the House, these bills are expected from Peter DeFazio (D-OR) and Richard Neal (D-MA), chairs of the Transportation and Infrastructure Committee and the Ways and Means Committee, respectively.
  • How to pay for the price tag of these measures remains an overriding issue. Possible revenue sources for infrastructure investments were discussed by the White House with a bipartisan group of Senate leaders on Feb. 11, and House leaders on March 4.  (Roundtable Weekly, Feb. 12 and Feb. 19, and Reuters, March 4)

Congressional Committees’ Influence

Senate Energy Committee Chairman Joe Manchin (R-WV)

  • Capitol Hill hearings this week focused on various aspects of low-carbon energy, climate-resilient infrastructure and transportation issues. (Axios, March 8, “Energy and climate move closer to center stage on Capitol Hill”)  The House Energy Committee will start hearings next week on its CLEAN Future Act (E&C press release, March 11)
  • Senate Energy Committee Chairman Joe Manchin (R-WV), above, told “Axios on HBO” that he will seek tax increases to pay for Biden’s upcoming proposal, and will use his leadership position to pursue bipartisan solutions to climate realities.
  • Manchin said the budget process called reconciliation should not be pursued to pass the climate and infrastructure package. Reconciliation was used to advance the pandemic relief bill without Republican support in the 50-50 Senate. (Axios, “Manchin’s Next Power Play,” March 8).
  • Senate Environment and Public Works Chairman Tom Carper (D-DE) told Bloomberg this week that a transportation infrastructure package could move through his committee by the end of May and signed into law as part of a broader economic recovery plan by the end of September. (Bloomberg, March 10)

Michael Regan Confirmed as EPA Administrator

EPA Administrator Michael Regan

  • Michael Regan was confirmed this week as Administrator of the Environmental Protection Agency (EPA).  He will apply his experience as North Carolina’s environmental chief to broad federal policies addressing climate change and energy efficiency. (E&E News and Reuters, March 10)

What’s Next

The Real Estate Roundtable, as part of the Build by the 4th coalition, is encouraging Congress to pass a comprehensive infrastructure package by Independence Day 2021. The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is also focused on climate and energy regulations on buildings emerging at the state and local level. 

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President Biden Signs Landmark COVID-19 Aid Legislation Passed by Congress in Near Party-Line Votes

Posted on by Trey Jackson

President Biden Signs Pandemic Relief Bill March 11, 2021

President Joe Biden signed his landmark $1.9 trillion pandemic relief package (H.R. 1319) into law yesterday – the largest injection of federal cash in history into a growing U.S. economy – before unemployment benefits begin expiring on March 14. (Politico March 9, Wall Street Journal March 10 and AP, March 11) 

Why It Matters 

  • The total economic stimulus passed by the U.S. government over the past year now totals $5.3 trillion. The American Rescue Plan Act of 2021 is the third and largest coronavirus relief package. (U.S. News and World Report, March 10 and Axios Capital, Mach 11)
  • President Biden commented during the signing ceremony of the relief package, “…this historic legislation is about rebuilding the backbone of this country and giving people in this nation — working people and middle-class folks, the people who built the country — a fighting chance. That’s what the essence of it is.” (White House, March 11, Remarks by President Biden at Signing of the American Rescue Plan)
  • Key provisions of the new law are detailed in The Roundtable’s “Summary and Analysis of Key Economic Provisions in The American Rescue Plan.” Recovery rebates of $1,400 for the vast majority of Americans and large one-year expansions of the child and child care tax credits are provided, along with increases in subsidies for health insurance and the earned income tax credit.  Additional provisions include:
     
    • $350 billion in direct fiscal aid to state and local governments
    • $242 billion to extend enhanced unemployment benefits through Sept. 6
    • $170 billion for educational institutions
    • $28.6 billion for a Restaurant Revitalization Fund
    • $26.1 billion for urban mass transit grants
    • $21.55 billion for residential rental assistance
    • $5 billion for tenant-based residential rental vouchers 
  • The bill does not include an extension of the current eviction moratorium for residential tenants or an increase in the federal minimum wage.
     
  • While there is little business tax relief in the bill, provisions excluding restaurant and small business grants from income tax should further strengthen The Roundtable’s push to exclude COD income from tax during the pandemic, particularly since The Roundtable has explicitly proposed that the exclusion be accompanied by offsetting adjustments to tax attributes.
  • The Roundtable is also continuing to urge Congress to enact the Retail Revitalization Act (H.R. 840) as part of its relief efforts. This bill would save thousands of retail jobs by allowing REITs to make equity investments in struggling tenants without violating current related-party rent rules. The bipartisan bill is cosponsored by a growing list of Ways and Means Committee Members. (Roundtable Weekly, Feb. 5, 2021)

 Reference:

 What’s Next  

  • Economists expect the legislation to spark 5.95% GDP growth, the fastest in nearly 40 years, according to a recent survey by the Wall Street Journal. The poll also reports that economists expect consumer prices will rise 2.48% by December, compared to last year, and projects employers will add an average 514,000 jobs per month over the next four quarters. (Wall Street Journal, March 10)

Congressional Democrats passed the massive relief package using a budget process called reconciliation that requires a simple majority vote, bypassing the 60-vote requirement typically needed to advance most legislation in the 50-50 Senate. It is uncertain whether Democrats will opt to take a similar approach to other major policy initiatives as President Biden prepares his next major legislative push on infrastructure. 

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Roundtable Analysis and Summary of The American Rescue Plan

Posted on by Trey Jackson

March 6, 2021 – Senate Democrats passed an amended, $1.9 trillion pandemic relief package, The American Rescue Plan – that has now been sent back to the House for final passage before current unemployment benefits expire March 14. 

See The Roundtable’s document — “Summary and Analysis of Key Economic Provisions in The American Rescue Plan.”

February 27, 2021 – The American Rescue Plan Act of 2021 (H.R. 1319) was passed by the House of Representatives is a $195 trillion COVID-19 relief package that provides $638 billion in tax cuts, offset by $45 billion in tax increases, and represents over 2% of GDP in 2021.

 

Federal Judge Rules CDC’s Tenant Eviction Ban is Unconstitutional; Justice Department Vows Appeal

Posted on by Trey Jackson

Campus sign for U.S. Centers for Disease Control and Prevention (CDC)

A national eviction moratorium issued by the U.S. Centers for Disease Control and Prevention (CDC) is unconstitutional, according to a Feb. 25 ruling by a federal judge in Texas. The ruling does not address similar state-level bans, but raises key questions on the extent of the federal government’s power to prevent residential tenant evictions during the pandemic. (National Multifamily Housing Council and GlobeSt, Feb. 26)

  • The federal eviction moratorium – first enacted by Congress almost a year ago in the CARES Act, and since extended by both the Trump and Biden Administrations by executive orders, currently expires on March 31.
  • Biden might further prolong the CDC’s eviction ban though another executive order. (Washington Post and NBC News, Feb. 26)  The $1.9 trillion COVID relief bill passed by the House last week and pending before the Senate does not include a federal eviction ban due to procedures moving the package through “reconciliation” rules. (CNBC, March 2.)
  • In striking the CDC’s action, Judge J. Campbell Barker of the U.S. District Court for the Eastern District of Texas ruled in favor of an individual landlord and six property management companies that claimed the moratorium exceeds the federal government’s power to regulate “commerce” under Article I of the U.S. Constitution. (BGov, Feb. 25)
  • He wrote: “Here, the regulated activity is not the production or use of a commodity that is traded in an interstate market. Rather, the challenged order regulates property rights in buildings—specifically, whether an owner may regain possession of property from an inhabitant.” (Terkel v CDC, Feb. 25)
  • The Department of Justice (DOJ) on Feb. 27 announced it would appeal the decision. DOJ maintains the decision “does not extend beyond the particular plaintiffs in that case, and it does not prohibit the application of the CDC’s eviction moratorium to other parties. For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect.” (DOJ statement, Feb. 27)

The Roundtable & Rental Assistance

Jeffrey DeBoer testimony on behalf of The Real Estate Roundtable

  • Roundtable President and CEO Jeffrey DeBoer testified during a Senate Banking Committee hearing last year that the CDC moratorium underscores the need for a dedicated fund to help impacted tenants meet their rent payments.
  • He also testified that shoring-up a reliable stream of rent payments also provides apartment owners with the revenue they need to pay their property taxes, utility bills, employ their own workers, and invest in their building assets to keep them running safely and efficiently. (DeBoer Written Testimony, Sept. 9, 2020)
  • In Dec. 2020, Congress passed omnibus legislation that provided $25 billion in rental assistance.  Last week, the House passed a $1.9 trillion pandemic relief package that included an additional $19 billion for residential rental assistance through Sept. 30, 2027.  (See The Roundtable’s Summary and Analysis of Key Economic Provisions in The American Rescue Plan.)
  • The Wall Street Journal recently reported that small landlords who rely on rental income for their retirement are vulnerable to eviction bans – as millions of tenants are behind on rent, awaiting federal Covid-19 assistance. (WSJ, Feb. 26 and March 1)

Alston and Bird notes in an analysis of the Texas decision that “Absent a broad injunction, the decision has very limited effect. Nonetheless, the ultimate outcome of Terkel v. CDC could have important implications for other courts considering the scope of government action in response to the COVID-19 pandemic – particularly if it is upheld on appeal or ultimately heard by the U.S. Supreme Court.” (Alston & Bird, March 1)

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New Bills Would Help Offset COVID-Prevention Workplace Expenses and Permanently Extend 20% Pass-Through Deduction; Industry Seeks Cost Recovery Transition Relief for Rental Housing

Posted on by Trey Jackson

Downtown Houston, Texas

Two recently introduced legislative proposals supported by The Real Estate Roundtable would address issues important to commercial real estate. The Healthy Workplaces Tax Credit Act  would provide a new tax credit for business owners’ expenses associated with reducing the risk of COVID-19 in the workplace. The Main Street Tax Certainty Act would permanently extend the 20% pass-through business income deduction enacted in 2017.  Separately, a coalition of real estate organizations, including The Roundtable, urged Treasury this week to provide guidance allowing property owners to fully benefit from legislation enacted in December that clarified the cost recovery period for rental housing.

Healthy Workplaces Tax Credit

  • On March 2, Sens. Rob Portman (R-OH) and Kyrsten Sinema (D-AZ) introduced the bipartisan Healthy Workplaces Tax Credit Act. (See one-page summary)
  • The bill includes several measures that would help businesses reopen safely, while ensuring employee and customer confidence, by providing:
    • a refundable tax credit against payroll taxes for 50 percent of the costs incurred by the business for COVID-19 testing, PPE, disinfecting, extra cleaning, reconfiguring workspaces, and employee education and training until the end of the year; and
    • an income tax credit for expenditures made to reconfigure work spaces last year (March 13, 2020- December 31, 2020)
  • Chip Rogers, president and CEO of the American Hotel & Lodging Association, stated, “The Healthy Workplace Tax Credit is critical legislation for industries like ours, to help offset these significant, but necessary operating costs at a time when hotel revenues remain down 40% or more across the country.” (Sen. Portman news release, March 2, 2021)
  • A broad business coalition, including The Real Estate Roundtable, urged Congress last July to pass a “healthy workplaces” tax credit as part of coronavirus relief. (Coalition letter,  July 16, 2020 and Roundtable Weekly  July 17, 2020).   Sen. Portman originally introduced a Healthy Workplaces Tax Credit bill on July 20, 2020.

20% Deduction for Pass-Through Business Income (Section 199A)

  • Last week, Members of Congress in both the House and Senate introduced legislation to extend permanently the 20 percent deduction for qualified pass-through business income permanent. The bills are strongly supported by more than 80 stakeholder groups, including The Real Estate Roundtable. (Rep Jason Smith news release, Feb. 26)
  • Sen. Steve Daines (R-MT), Rep. Jason Smith (R-MO), and Rep. Henry Cuellar (D-TX) introduced the Main Street Tax Certainty Act to support small businesses, help create jobs and strengthen the economy. Without congressional action, the deduction will expire at the end of 2025.
  • In a February 26 letter to the leadership of the Senate Finance and House Ways and Means committees, The Roundtable and other stakeholders stated that making the section 199A deduction permanent would provide certainty to small businesses affected by the COVID-19 pandemic. (Tax Notes, March 1)

Real Estate Industry Requests Rental Housing Cost Recovery Guidance

  • On March 2 a coalition of real estate industry organizations requested the Treasury Department and IRS issue guidance that would allow taxpayers to automatically change their method of accounting in order to benefit from the technical correction to the rental housing recovery period that was in the end-of-year omnibus spending bill enacted in December (Roundtable Policy Alert, Dec 22, 2020)
  • The 2020 law clarified that properties placed in service before 2018 are eligible for the new 30-year cost recovery period under the Alternative Dispute System (ADS).
  • The industry letter was led by the National Multifamily Housing Council and joined by The Real Estate Roundtable, International Council of Shopping Centers, Nareit, and others.
  • The letter also requests transition relief that would allow real estate partnerships to file amended returns to opt out of the limitation of business interest deductibility now that the penalty for opting out is a 30-year cost recovery period, rather than the prior 40-year ADS recovery period.

The Roundtable and its Tax Policy Advisory Committee (TPAC) will continue to work with policymakers in Congress and regulatory agencies on the fair and equitable tax treatment of real estate.

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House Democrats Introduce Sweeping Climate Legislation Including Building Codes, Benchmarking and SEC Reporting Provisions

Posted on by Trey Jackson

Capitol with evening sky
House Democrats on March 2 introduced a sprawling bill aimed at achieving net-zero greenhouse gas emissions by 2050 with provisions regarding building construction, operations, and ESG reporting. (Politico, March 3 and CQ News, Reuters, March 2)

  • The 981-page Climate Leadership and Environmental Action for our Nation’s (CLEAN) Future Act– 981-page measure is sponsored by House Energy & Commerce Committee Chairman Frank Pallone (D-NJ); Climate Change Subcommittee Chairman Paul Tonko (D-NY) and Energy Subcommittee Chairman Bobby Rush (D-IL), (BGov, March 3)
  • The House Committee noted provisions that would impact commercial and residential real estate. “The CLEAN Future Act improves the efficiency of new and existing buildings, as well as the equipment and appliances that operate within them. It establishes national energy savings targets for continued improvement of model building energy codes, leading to a requirement of zero-energy-ready buildings by 2030.” (Energy & Commerce Committee news release, March 2)
  • The CLEAN Future Act also proposes mandatory federal-level energy and water “benchmarking” requirements for buildings over 50,000 square feet. These provisions mimic dozens of existing state and local requirements that currently require building owners to track their assets’ energy and water usage and disclose this information to the public.
  • CLEAN Future Act reference:
  • The bill also directs the Securities and Exchange Commission (SEC) to require public companies to disclose in annual reports information about their “direct” and “indirect” GHG emissions, and corporate governance procedures to identify and manage climate-related risks. (Akin Gump Strauss Hauer & Feld LLP, March 3)
  • Acting SEC Chair Allison Herren Lee recently issued a Climate Change Statement explaining, “[n]ow more than ever, investors are considering climate-related issues when making their investment decisions” and that it is the SEC’s “responsibility to ensure that they have access to material information when planning for their financial future.” (SEC statement, Feb. 24  and Gibson Dunn, March 1) 

While the measure will likely face substantial challenges to attract 60 votes in the evenly divided Senate, The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is conducting a detailed analysis of the CLEAN Future Act’s impacts on the real estate sector. 

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Roundtable’s Q1 Sentiment Index Shows CRE Execs Optimistic About Market Conditions

Posted on by Trey Jackson

Q1-2021-Sentiment Index Graph - HomePage

Commercial real estate industry leaders continue to acknowledge the effects of the COVID-19 pandemic on various asset classes, while expressing increased optimism about market conditions for the remainder of 2021, according to The Real Estate Roundtable’s Q1 2021 Economic Sentiment Index. The March 3 Index also reports on growth potential for the industrial and multifamily sectors, while hospitality and retail continue to face challenges due to government restrictions and health guidelines.

  • Real Estate Roundtable President and CEO Jeffrey DeBoer stated, “Our Q1 index indicates that despite the extremely challenging past 12 months, industry leaders are optimistic that market conditions are trending in positive way. General supply and demand market balance, functioning capital markets, and low leverage – combined with increased vaccination efforts – have sparked the strong uptick in optimism. Of course all of this is threatened if vaccinations stall overall, or if national policymakers impose new tax or regulatory burdens on the industry.”
  • DeBoer also noted the positive role that real estate has played in combatting the pandemic. “Throughout the pandemic, real estate owners, managers, investors and lenders each have focused on mitigating the impact of the crisis on their residential and business tenants. The industry has restructured leases with tenants under stress, advocated for federal rental and other assistance, helped educate tenants on how to access relief, provided significant reforms to health-related building operational protocols, and issued detailed guidance to ensure safe and effective ways to re-enter buildings,” he said.
  • The Roundtable’s Q1 2021 Sentiment Index registered at 59 – a fifteen-point increase from the previous quarter.  [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.]. This quarter’s Current Conditions Index of 44 increased 17 points from the previous quarter, while this quarter’s Future Conditions Index of 74, is an increase of 13 points compared to last quarter. The last time the Future Conditions Index registered at 74 was Q3 2010.

    The report’s Topline Findings include: 

  • The Q1 2021 Real Estate Roundtable Sentiment Index registered a score of 59, an increase of 15 points from the fourth quarter of 2020. Respondents continued to express optimism about future conditions; however, the outlook is highly dependent upon asset class and portfolio mix.
  • The industrial and multifamily sectors were cited as having been the most resilient to the global pandemic, and best positioned to emerge successful in a post-pandemic environment. Retail and hospitality sectors continue to face challenges stemming from public health measures and government restrictions.
  • Low transaction volume has resulted in limited visibility into asset valuations over the past year. Among the trades that have occurred, industrial assets have seen their values increase, mirroring the market overall, while multifamily properties are trading at a slight discount to their pre-COVID values.
  • Capital flows within the real estate market are following the sector-specific impacts of the pandemic. Most respondents cited accessible capital markets for high quality assets, particularly in the industrial and multifamily spaces. However, out-of-favor property types and strategies with leasing and/or development exposure are finding it more difficult to secure institutional equity and financing. 

Data for the Q1 survey was gathered by Chicago-based FPL Associates on The Roundtable’s behalf.  For the full Q1 report, visit here and full news release.

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Senate Advances Pandemic Relief Package as President Biden Pushes Infrastructure Plan

Posted on by Trey Jackson

White House with Washington monument in background

Senate Democrats this week advanced an amended, $1.9 trillion pandemic relief package that is expected to pass on a party-line vote – then sent back to the House for final passage before current unemployment benefits expire March 14. (Politico, March 4 and Congress.gov, actions on H.R. 1319)  

  • President Biden, who has championed the COVID-19 legislation, agreed to changes in the package such as restrictions on the use of $350 billion in state and local funding to solidify Democratic support in the 50-50 Senate. (BGov, March 4 and text of the amended Senate bill)
  • CQ reported that financial allocations changes for states and local governments require federal assistance be used for specific purposes, including: 
    • Aid to households, small businesses or nonprofits, or aid to “impacted” industries like tourism, hospitality and travel;
    • Funding government services that reduced due to the pandemic-related hit to tax revenue;
    • “Necessary investments” in water, sewer, or broadband infrastructure. 
  • Senate Majority Leader Chuck Schumer (D-NY) said yesterday, “No matter how long it takes, the Senate is going to stay in session to finish the bill, this week.” (Politico, March 4).
  • Meanwhile, the White House push for a massive infrastructure bill was discussed on March 4 in a meeting with President Biden, Transportation Secretary Pete Buttigieg and a bipartisan group of House members led by Rep. Peter A. DeFazio (D-OR), chairman of the House Transportation Committee.  (Bloomberg, March 4)
  • Biden remarked at the start of the meeting, “We’re going to talk about infrastructure and American competitiveness and what we’re going to do to make sure that we once again lead the world across the board on infrastructure. It not only creates jobs but it makes us a helluva lot more competitive around the world.”  (White House, March 4)
  • The White House infrastructure plan is expected to emphasize climate change, but legislation has not been unveiled nor has its cost or methods to pay for the initiative. (Wall Street Journal, March 4)
  • The critical need for investing in modern and sustainable infrastructure was also the focus of a Feb. 11 White House meeting between Biden, Vice President Kamala Harris, Buttigieg and a bipartisan group of senators from the Environment and Public Works Committee. (Roundtable Weekly, Feb. 12)
  • In a December 16, 2020 letter, The Roundtable and 12 national real estate organizations provided detailed recommendationsto then President-elect Biden and Vice President-elect Harris that included infrastructure funding and modernization as engines to drive recovery and job growth from the economic fallout of the COVID-19 pandemic.

The Roundtable is part of Build by the 4th coalition led by U.S. Chamber of Commerce, which encourages the Biden Administration and the new Congress to pass a comprehensive infrastructure deal by Independence Day 2021. 

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Q1 Survey: Commercial Real Estate Executives Express Optimism About Current and Future Market Conditions

Posted on by Trey Jackson

Current Conditions Index Increases Seventeen Points from Previous Quarter

(WASHINGTON, D.C.) — Commercial real estate industry leaders continue to acknowledge the effects of the COVID-19 pandemic on various asset classes, while expressing increased optimism for both current and future market conditions for the remainder of 2021, according to The Real Estate Roundtable’s Q1 2021 Economic Sentiment Survey released today. The report outlined the potential for growth for the industrial and multifamily sectors, while hospitality and retail continue to face challenges due to government restrictions and health guidelines.

“Throughout the pandemic real estate owners, managers, investors and lenders each have focused on mitigating the impact of the crisis on their residential and business tenants,” said Real Estate Roundtable President and CEO Jeffrey D. DeBoer. “The industry has restructured leases with tenants under stress, advocated for federal rental and other assistance, helped educate tenants on how to access relief, provided significant reforms to health related building operational protocols, and issued detailed guidance to ensure safe and effective ways to re-enter buildings.” DeBoer added, “Our Q1 index indicates that despite the extremely challenging past 12 months, industry leaders are optimistic that conditions are trending in positive way. General supply and demand market balance, functioning capital markets, and low leverage, combined with increased vaccination efforts have sparked the strong uptick in optimism. Of course all of this is threatened to be reversed if vaccinations stall overall, or if national policymakers impose new tax or regulatory burdens on the industry.” 

The Roundtable’s Q1 2021 Sentiment Index registered at 59 – a fifteen-point increase from the previous quarter.  [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.]. This quarter’s Current Conditions Index of 44 increased 17 points from the previous quarter, while this quarter’s Future Conditions Index of 74, is an increase of 13 points compared to last quarter. The last time the Future Conditions Index registered at 74 was more than a decade ago in Q3 2010.

The report’s Topline Findings include:

  • The Q1 2021 Real Estate Roundtable Sentiment Index registered a score of 59, an increase of 15 points from the fourth quarter of 2020. Respondents continued to express optimism about future conditions; however, the outlook is highly dependent upon asset class and portfolio mix.
  • The industrial and multifamily sectors were cited as having been the most resilient to the global pandemic, and best positioned to emerge successful in a post-pandemic environment. Retail and hospitality sectors continue to face challenges stemming from public health measures and government restrictions.
  • Low transaction volume has resulted in limited visibility into asset valuations over the past year. Among the trades that have occurred, industrial assets have seen their values increase, mirroring the market overall, while multifamily properties are trading at a slight discount to their pre-COVID values.
  • Capital flows within the real estate market are following the sector-specific impacts of the pandemic. Most respondents cited accessible capital markets for high quality assets, particularly in the industrial and multifamily spaces. However, out-of-favor property types and strategies with leasing and/or development exposure are finding it more difficult to secure institutional equity and financing.

DeBoer noted, “The Roundtable remains committed to working with the Administration and Congress to advance bipartisan federal measures that will accelerate the economic recovery and strengthen our resiliency in the event of future pandemics or similar threats: provide direct relief to workers and families, rental assistance for both residential and business tenants, temporary tax incentives to offset the cost of critical health and safety measures implemented by employers, and legal liability safeguards for businesses that clearly define expectations and create much-needed certainty for employers to facilitate a return to work.” 

Data for the Q1 survey was gathered by Chicago-based FPL Associates on The Roundtable’s behalf.  For the full Q1 report, visit here.