With the 2024 elections rapidly approaching, the outcome could significantly shape the future of the economy and the commercial real estate (CRE) industry.

Later this afternoon at 3:00 PM ET, The Roundtable will host an exclusive Zoom Town Hall session featuring Jonathan Martin, Politics Bureau Chief and Senior Political Columnist for POLITICO. He will share his expert insights on the political landscape, highlighting the most significant races and trends leading up to the election.

In addition to Martin’s analysis, The Roundtable will give a brief update on its policy priorities on tax policy, capital and credit issues, energy and sustainability initiatives, housing affordability, and more.

This Zoom session, provided to RER members only, will provide a unique opportunity to gain political insight from one of the country’s top analysts, alongside critical updates on the Roundtable advocacy efforts.

RER members will receive a link to register for the event.

If you are unable to join the session, a recording will be available next week.

Office vacancy rates are beginning to show signs of easing as companies ramp up efforts to bring employees back to the office, fueling optimism across commercial real estate. The office sector also saw key highlights in property conversions and sustainability efforts this week.

Driving Factors

• Office leasing demand has seen a noticeable uptick, partially thanks to broader factors such as greater economic stability and a stronger push from companies for employees to return to the office. (The Business Journal, Oct. 14)

• A mix of lower office vacancy rates and high-profile return-to-office mandates, like Amazon’s, could help stabilize a sector still grappling with the remote work shift. (Roundtable Weekly, Sept. 20)

Market Sentiment

• Although vacancy rates remain a concern, leasing activity is up in major cities across the US, such as New York City, Washington, D.C., Boston, and San Francisco. (Boston RE Times, Oct. 4; GlobeSt., Oct. 14; SF Examiner, Oct. 15 | Bisnow, Oct. 16)

• As reported in our Q3 2024 Sentiment Index, which measures commercial real estate executives’ confidence and expectations about the industry environment, there is growing confidence in the future of the commercial real estate market despite ongoing challenges. (Roundtable Weekly, Sept. 6)

• The Roundtable’s Q4 Sentiment Index survey is currently underway and expected to be released in early November.

• Additionally, JLL’s latest Global Future of Work survey found that organizations are “planning to increase and rebalance organizational headcount in the coming years and many are ready to invest into their real estate, expecting to increase budget and footprint.”

• Over 60% of survey respondents anticipate increased workplace utilization in the next five years, prioritizing more efficient and responsible use of real estate assets. (JLL Survey 2024)

Property Conversions

• Office-to-residential conversions are gaining traction as a solution to address high vacancy rates and housing shortages.

• In 2024, the number of office spaces being converted into apartments increased to 55,000, a staggering 357% jump from 2021, according to data from Yardi Matrix. (New York Post, Oct. 14)

• Property conversions can be a cost-effective means to re-purpose assets, provide new, affordable housing, revive struggling city centers and small businesses, restore local revenue sources, and reduce energy consumption. (Roundtable Weekly, Oct. 4)

Sustainable Innovation

• Investments in sustainability efforts also reflect growing confidence in the industry rebound and stability heading into 2025.

• Yesterday, the White House recognized BXP, Clark Pacific, Turner Construction Company, and Weldon Development Group as innovative real estate firms “stepping up to the challenge” of integrating cleaner, low-carbon construction materials in their projects – to help combat climate change and boost U.S. economic competitiveness. (White House fact sheet, Oct. 16)

• “The Federal Buy Clean Initiative, and BXP’s aligned construction specifications, send a strong demand signal to concrete producers that helps drive market transformation,” said Ben Myers, Co-Vice Chair of the Roundtable’s Sustainability Policy Advisory Committee (Senior Vice President, BXP). “As an active developer, we are interested in cost-effective methods of supply chain engagement to create more sustainable outcomes.”

The Roundtable continues to advocate for energy-efficient solutions, supporting property conversions and innovative building methods that align with the evolving needs of modern offices. These efforts are essential to creating sustainable workspaces and revitalizing cities.

While recent rate cuts from the Federal Reserve are providing relief for both CRE and housing markets, the affordability crisis remains at the forefront of policy debates in Washington.

Roundtable Housing Priorities

• Sustained recovery and resolution of the affordability crisis will require continued policy reform, increased housing supply, and greater collaboration between public and private sectors. (Roundtable Weekly, Sept. 27)

• The Roundtable continues to advocate for housing policies that:

• Housing policy has become a central issue in the 2024 presidential campaigns as well. (Associated Press, Aug. 27)

• Vice President Kamala Harris has proposed $25,000 in down payment assistance for first-time buyers and expanding federal funds to streamline local zoning laws and build 3 million homes.

• Former President Donald Trump countered with plans to reduce housing demand by restricting illegal immigration and opening federal land for housing development while opposing policies that promote urban densification, arguing they harm suburban property values.

Alternative Housing Solutions

• Property Conversions: The conversion of underutilized and often vacant buildings offers a tremendous opportunity to improve the built environment and uplift a surrounding locality.

• Modular Housing: A recent survey from The Amherst Group shows that Americans are warming up to modular housing as an alternative solution to the ongoing housing supply shortage. Nearly 90% of respondents find modular homes appealing, and four out of five (81%) would consider living in one themselves.

• With 71% of respondents interested in seeing more alternative housing types in their neighborhoods, modular homes could play a key role in expanding housing supply. (News Release, Oct. 8)

• Roundtable member and Amherst Chairman, CEO and CIO Sean Dobson emphasized the potential of modular housing:  "While the offsite construction process has been around for decades, it has yet to be adopted as a mainstream way to generate high-quality housing supply at scale. As a result, homebuilding remains overdue for disruption and innovation. Amid ongoing supply constraints in the U.S., we think modular construction is an important part of the solution.” (News Release, Oct. 8)

The Roundtable encourages policymakers to support federal incentives for affordable housing and zoning reforms to streamline housing development. These measures can help ensure that high-quality, affordable options, such as modular homes, are available to meet rising demand.