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Legislative Positions on the Issues Shaping CRE
Brian Walker
NAIOP is rooted in advocacy, having been founded more than five decades ago to address land use issues that impeded industrial real estate development. Today, our efforts on Capitol Hill, in Canadian provinces, and in statehouses and local municipalities are more important than ever because our industry’s interests are at risk from significant tax increases and stringent regulations.
Last year, we surveyed our members on their understanding of NAIOP’s legislative priorities and how they aligned with their business and personal interests. Not surprisingly, opinions varied based on location, business type and field of work. NAIOP chapters excel at representing a market’s priorities locally, and the knowledge shared among chapters is essential to helping prepare other regions for what could soon be emerging in their areas.
Earlier this year, around 300 NAIOP leaders from across the chapter network gathered in Washington, D.C., to visit elected officials on Capitol Hill. What a sight to see NAIOP members filling the hallways of Congress and conducting meetings with those making important decisions that have an everyday impact on our businesses.
During our meetings, we discussed the association’s federal legislative priorities, and I wanted to share them with all of our stakeholders here.
Adaptive reuse. Increases in remote work have led to historically high vacancy rates and underutilization of commercial structures in many communities. A 2023 study by McKinsey & Company has predicted that a shift to remote working across major global cities is likely to cause a loss in commercial real estate values of $800 billion by 2030. These reductions in real estate asset values are already negatively affecting state and local budgets. A coinciding lack of affordable housing could be reduced by repurposing existing structures. NAIOP has been working with federal lawmakers to establish a 20% tax credit for the eligible costs of conversions and believes that Congress should pass legislation to incentivize the adaptive reuse of vacant and underutilized commercial buildings. This approach could increase the supply of affordable housing and help restore economic vitality to communities facing budget shortfalls resulting from fallen commercial property values.
Tax policy. Commercial development is a significant driver of the U.S. economy. Federal tax policy should align with the economics of real estate development and investment, promote capital formation and foster community development. Retaining current capital gains tax rates and protecting Section 1031 like-kind exchanges recognizes the long-term, capital-intensive nature of assets and the continued investment needed to maintain vibrant markets. NAIOP believes that tax policies are critical factors in ensuring sufficient investment for long-term, productive real estate assets.
Capital and credit availability. Bank lending for commercial real estate is at historically low levels, and trillions of dollars in maturing debt is coming due in the next few years. Major causes include rapid and steep interest rate increases that have raised borrowing costs, and remote work patterns that have raised vacancy levels and reduced the value of office properties. NAIOP believes that Congress must exercise strong oversight of the Federal Reserve and other federal financial regulatory agencies to ensure that adequate credit is available for commercial real estate. Clear justification must exist for regulatory actions that increase capital requirements on banks and further limit their ability to lend.
I invite you to learn more about these priority issues and others on our agenda on the NAIOP website. More importantly, I urge you to get involved with our work by engaging with your chapter, connecting with our legislative team and lending your voice. Together, we can make a difference on the issues we are facing on Capitol Hill or in your state, province or local market.
Brian Walker, President, Burns Scalo Real Estate
2024 NAIOP Chair
