Boston CRE Gives Its Take On What The Midterm Results Mean For Development

Boston's development community hopes a split government can bring much-needed capital to the nation's roads and rails.

The results of the 2018 midterm elections brought good news to both major U.S. political parties. The Democrats regained control of the House of Representatives while the Republicans strengthened their majority in the Senate. Leaders of both parties have called for bipartisanship and emphasized the need to push an infrastructure bill — a key campaign platform of President Donald Trump that has not gained momentum since he took office — through Washington.

Fixing crumbling and congested infrastructure is a hot topic in Boston real estate, so Bisnow reached out to some of the city’s leading CRE voices to get their take on what they wanted — and could realistically expect — from Tuesday’s results.

NAIOP Massachusetts CEO David Begelfer

"What I want to happen is a bipartisan bill that will support public infrastructure improvements with a traditional 80/20 federal/state split in funding. These projects should include, at a minimum, mass transportation, stormwater and climate change mitigation. If there is one thing that both parties feel comfortable about, it is giving money to their constituent communities. 

What I think will happen will be a negotiated bipartisan bill that will fund transportation, primarily highways, with an 80% federal contribution. With the acrimony still alive and well, monies for climate-oriented projects, stormwater systems, and, possibly, mass transit, will likely be left on the drafting room floor."

O’Connor Capital Partners President Joel Bayer

"We believe there will be a big increase in infrastructure spending. It is a very popular policy to implement for constituents of both parties. People love to see infrastructure improvements in their local areas, as it allows politicians to take credit for executing specific, tangible projects in their local areas.

Increased infrastructure spending is great for the real estate industry. It stimulates the economy and generates more consumer disposable income to spend in retail stores and on housing. We should see increases in the values of real estate assets."

Hudson Group Partner Noam Ron

"I hope to see CRE developers and owners stepping up to fulfill the needs of their local communities as the government continues its bickering and infighting. 

On infrastructure, I’d want to see both the right and the left fulfill their obligations to the American public by advocating for sorely needed repair and improvement projects to America's aging highways, bridges and transit systems. 

What will actually happen? I’m cautiously optimistic that both parties will realize that funding for infrastructure can pay dividends in the form of jobs, access to housing, and healthier cities and towns."

Cushman & Wakefield Economist and Americas Head of Forecasting Rebecca Rockey 

"Infrastructure spending is a good thing for CRE. It would boost economic growth, and have positive downstream effects on commercial property markets. Aside from pure economic effects, infrastructure development brings value to commercial property markets, often in the form of development near public transportation, in walkable areas — both urban and suburban — features that younger generations are looking for. 

With rising deficits, it’s not clear there will be the political appetite in Congress to increase spending significantly, particularly in the Senate. However, the House is more likely to support an infrastructure spending plan. I could easily envision attempts to get this done, but possibly in a watered-down format. It’s also possible that, in order to minimize the budgetary impact, credit subsidies will be used to encourage such investment."

Former Boston City Council President Larry DiCara

"I’d like to see greater incentives for people to both develop and own real estate. Certainly, restoring the tax deduction for all state and local taxes is one, but there are various kinds of programs to pursue.

The federal government once had programs like the Section 202 program that encouraged people to build housing. The 202 program is still there, but very little of the money is. It provides money to build housing for older people with low incomes. Why should we not build housing for older people with moderate incomes? Who can be against that? Pump money into that, and you can house people in safe environments and free up housing stock. When you free up housing in the marketplace, it obviously helps with our supply problem.

If there is any public policy move which could be very detrimental to the real estate industry, it is the limitation on the deduction of state and local taxes to $10K. That is a disincentive to people to buy property, which means people in the business of building houses and condos may currently be reluctant to do so. U.S. Rep. Richard Neal (D-Mass.), who will chair the House Ways and Means Committee, knows this is an important issue. In my opinion, this change in the law results from geography. The red states ganged up, had the votes, and rammed it through. I suspect a lot of folks may decide it’s a smart thing to change this."