Stimulus Bill Could Help Commercial Real Estate

The theory behind the passage of the $787 billion stimulus bill is that money flowing out into the economy will eventually spark consumer spending and jump start the economy. Once that happens, other sections—specifically commercial real estate—will feel the boost. For that reason, commercial real estate (CRE) professionals are applauding the passage and sincerely cheering for its success.

The stimulus bill contains more than $135 billion in construction and infrastructure investments, according to the Associated General Contractors of America (AGC). The construction and infrastructure measures are expected to create or save 650,000 construction jobs and 300,000 positions in related fields.

AGC also estimates that the $135 billion will increase personal earnings nationwide by $75 billion and add $230 billion to GDP. While noting that it expects much of this to be public sector development, AGC expects opportunities for building to spill over into the private sector.

While there was a great deal of bickering and posturing amongst lawmakers, the main argument surrounding the bill was whether it would actually work. CREs are hopeful and have their fingers and toes crossed but they should remain focused on short-term survival strategies and hope that the stimulus packages reaches the consumers and the economy sooner than later. Greg Womack, president of Womack Investment Advisors, says that building owners should deal with mid- to largesized companies that have strong cash flow and balance sheets.” Go for longer term leases of 10 to 15 years to avoid having to worry about re-signing properties in a tough market,” he advises.

“The commercial real estate market is feeling some pain from the credit crisis, some more severe depending on the region. Those management companies that buy and lease properties that are dealing with tenants that have strong balance sheets and good business models should fair well,” says Womack.

Source: GlobeSt.com