Pressure on Congress and the White House ratcheted up this week after Treasury Secretary Janet Yellen warned that the U.S. could default on its $31.4 trillion debt as early as June 1. President Joe Biden will meet on May 9 with House Speaker Kevin McCarthy (R-CA), Senate Minority Leader Mitch McConnell (R-KY), Senate Majority Leader Chuck Schumer (D-NY), and House Minority Leader Hakeem Jeffries (D-NY) to discuss raising the US debt limit and Republican concerns about federal spending levels. (Treasury letter, May 1 | Bloomberg and New York Times, May 2)

Looming Deadline

• The estimated date that Treasury will run out of money to pay its bills is called the “X date.” Moody’s Analytics Chief Economist Mark Zandi told the Senate Budget Committee yesterday that the best case scenario for hitting the X date is August 8 and the worst is June 1. (BGOV, May 5)
  
  
• Zandi testified, “The Treasury debt limit drama is heating up and is sure to get much hotter in coming weeks as we have a better understanding of the 2023 tax filing season and the actual X-date.”
  
  
• Zandi also noted how a debt ceiling extension could be combined with annual budget talks. “If the X-date is as soon as early June, it seems a stretch for lawmakers to come to terms fast enough, and they instead will decide to pass legislation suspending the limit long enough to line the X-date up with the end of fiscal 2023 at the end of September. This will buy time and combine the debt limit decision with the federal government’s fiscal 2024 budget, which is also must-do legislation for lawmakers to ensure the government is funded and avoids a shutdown,” Zandi stated. (Senate Budget Committee hearing, May 4)
  
  
• Office of Management and Budget Director Shalanda Young suggested this week that the White House may be open to a short-term debt ceiling extension. “I’m sure one of the things on the table we will have to work through is how long. I’m not going to take anything off the table,” Young said. (Reuters and The Hill, May 4)

Policy issues related to raising the debt ceiling and CRE market conditions will be discussed be during The Roundtable’s all-member meeting on June 13-14 in Washington, DC.

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The Real Estate Roundtable and 11 other national industry organizations on May 2 expressed their support for legislation that would bolster the Federal Housing Administration’s (FHA) ability to finance multifamily housing construction throughout the country.  The joint letter backed a discussion draft released on April 26 by Sen. Bob Menendez (D-NJ) before a Senate Banking, Housing, and Urban Affairs Committee hearing, “Building Consensus to Address Housing Challenges.”  (Coalition letter)

Housing Supply Constraints

• The industry coalition letter noted how FHA’s base statutory limits define the number and size of multifamily mortgages that the Department of Housing and Urban Development (HUD) can insure nationwide. The letter also emphasized how FHA’s multifamily insurance programs need to capture the true cost of current apartment construction using a more accurate price index.
  
  
• Menendez, a senior member of the Banking Committee, stated during the hearing that his measure would increase FHA’s multifamily lending authority throughout the country for the first time in 20 years, enable the agency to better support apartment construction, and ultimately bring down rental costs. (Hearing video clip and Menendez news release, April 26)
  
  
• FHA’s statutory limits are now significantly below current multifamily construction costs, which poses an unintentional regulatory barrier to middle-income housing.
  
  
• The joint letter also recommended that FHA track residential construction costs more accurately by changing the index used for future annual inflationary adjustments—from the Consumer Price Index (CPI) to the Census Bureau’s Price Deflator Index of Multifamily Residential Units Under Construction.
  
  
• FHA’s base limits for 2022 would be 26% higher than their current estimates by using the Price Deflator index instead of CPI.
  
  
• FHA’s current limits and inaccurate price index now consider communities throughout the nation—from Columbia, South Carolina to Cleveland, Ohio—as “high-cost areas,” thereby constraining urgently needed workforce housing projects across the country.

Other Legislation

• Other housing issues discussed during the hearing included zoning and land use regulation, limiting regulation, and the Low-Income Housing Tax Credit (LIHTC).
  
  
• Senate Banking Committee Ranking Member Tim Scott (R-SC), above, discussed his newly proposed discussion draft of the Renewing Opportunity in the American Dream (ROAD) to Housing Act, which seeks to reform housing programs and prioritize HUD grants to recipients located in communities designated as Opportunity Zones.
  
  
• The National Multifamily Housing Council (NMHC) and National Apartment Association (NAA) submitted testimony for the April 26 committee hearing. (NMHC news release summary, May 1)

As Congress aims to advance bipartisan housing bills in the coming months, The Roundtable will continue to support innovative policy solutions and development incentives to develop increase the supply of affordable housing.

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John C. Cushman, III—Cushman & Wakefield’s chairman of global transactions, real estate industry titan for 60 years, and one of the founding members of The Real Estate Roundtable—passed away yesterday.

Industry Icon

• Real Estate Roundtable Chair John Fish (Chairman and CEO, SUFFOLK) said, “As a founding member of The Roundtable, and later as a member of our Board of Directors, John Cushman consistently helped us with his knowledge, his relationships and his voice. John’s legacy will live on in the real estate industry and in the countless communities he touched.”
  
  
• “The loss of John Cushman is a sad day,” said Jeffrey DeBoer, Roundtable President and CEO. “John’s personable and passionate approach to life was unique and inspiring. His sharp focus on structuring real estate transactions to meet the needs of business tenants and building owners was unparalleled. Time and again he rallied the industry to support positive economic and job growth initiatives. He made an enormous contribution to the commercial real estate industry—and to The Real Estate Roundtable’s advocacy efforts. The Roundtable, and I personally, will deeply miss him. We will always remember him as a generous, kind, and thoughtful friend.”
  
  
• Cushman & Wakefield Executive Chairman Brett White said, “John was an extraordinary businessperson and global citizen who significantly impacted Cushman & Wakefield, the commercial real estate industry and broader community.”
  
  
• The Cushman family stated, “John’s successes in commercial real estate were extremely notable but his positive impact on so many careers are what mattered to him even more. John always valued the importance of giving back and was a staunch supporter of many philanthropic efforts. His contributions to so many organizations will contribute to his legacy.” (John Cushman’s community involvement)

An Exemplary Career

(John Cushman with Jeffrey DeBoer at a Real Estate Roundtable meeting)

• Over the course of his career, John Cushman played an essential role in advancing Cushman & Wakefield to its position as one of the top commercial real estate firms in the world. Prior to his becoming chairman of global transactions and co-chairman of the Board of Cushman & Wakefield, John was acknowledged as the top office-leasing broker in the United States. (List of clients and assignments)
  
  
• He began his career in 1963 in New York City with Cushman & Wakefield, founded by his grandfather John Clydesdale Cushman and his great uncle Bernard Wakefield. In 1967, he moved to Los Angeles to open Cushman & Wakefield’s first office in Southern California. In 1965, as President of the Western Region, he was responsible for 60% of Cushman & Wakefield’s offices in the United States.
  
  
• John and his twin brother, Louis B. Cushman, started their own firm in 1978, Cushman Corporation Realty, which they grew from two offices to operations in 11 US cities with over 200 employees. In September 2015, Cushman & Wakefield merged with DTZ, with the newly formed organization retaining the storied Cushman & Wakefield name. In 2017, John served as chairman of the Centennial Committee for Cushman & Wakefield’s 100th anniversary.
  
  
• Cushman & Wakefield is now among the largest real estate services firms with 52,000 employees in over 400 offices and approximately 60 countries. In 2022, the firm had revenue of $10.1 billion across core services of property, facilities and project management, leasing, capital markets, and valuation and other services.

The Cushman family respectfully asks that individuals who would like to make a gesture in John’s honor visit a national park site or make a donation to the National Park Foundation on behalf of John C. Cushman, III.

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