The government shutdown, just days away from being the longest in history, has stretched into its 20th day, with 800,000 federal employees either furloughed from their jobs or working without immediate pay.
Needless to stay, the halt or slow down of services from the Environmental Protection Agency, Department of Housing and Urban Development, Family Housing Administration and General Services Administration, among others, is being felt across a number of commercial real estate sectors. Effects of reduced spending from furloughed workers are already being seen in retail and hospitality.
With no end to the shutdown in sight, we thought it was time to round up the areas where commercial real estate is feeling the strain.
Energy programs: The Environmental Protection Agency regulates emissions of air pollutants and administers voluntary efficiency programs such as Energy Star and the Combined Heat and Power Partnership program. According to the Energy Star Portfolio Manager Website “The U.S. federal government is closed due to a lapse in appropriations. For the duration of the U.S. government shutdown, all ENERGY STAR tools, resources, and data services will not be available.”
Multifamily developments: Short staff at the Department of Housing and Urban Development is limiting the processing of loans for housing projects and enforcement of federal housing regulations.
Opportunity Zones: The program provides tax deferments and tax breaks for investors who put capital in projects or companies in designated low-income neighborhoods across the country. The IRS cancelled a key hearing scheduled for January 10th and plans to reschedule when full funding is restored to the Treasury Department.
Office space: The General Services Administration leases office space for more than 1.2 million federal workers — which adds up to hundreds of millions of dollars in rent payments every year. Landlords don’t have anything to worry about yet, but a longer lasting shutdown could cause trouble. Small businesses reliant on loans from the Small Business Administration won’t be able to lease intended office or retail space.