Matt Kelly And Other Top DC Developers Weigh In On Trump Administration
These days, any gathering of top business leaders, or anyone for that matter, is likely to turn into a conversation about the potential effects of the Donald Trump presidency. The panel of Oliver Carr, Vicky Davis, Matt Kelly and Chris Mundy at Newmark Grubb Knight Frank's BenchMarks DC event last night was no different.
The soon-to-be CEO of DC's largest real estate company, JBG Smith, Matt Kelly began his prognostication with a caveat about the difficulty of predicting anything when it comes to Trump. But he says he does expect increased defense spending to boost NoVa's office market, which would directly impact his company once it merges with Vornado's massive Crystal City portfolio.
"Generally, the view I seem to be hearing from most people is optimism," Matt, second from the right, said. "It's likely to be positive for the local commercial real estate market."
Carr Properties CEO Oliver Carr joked that having a real estate developer in the White House is a scary thought, but noted some potential benefits.
"Developers like three things: they like to build, they like to spend, and they like lower taxes, so I think that could be the recipe," Oliver, on the right with moderator NGKF's Sandy Paul, said. "He’s been out front talking about infrastructure, which could benefit this region and every region around the country, and I'm hopeful the alignment in the federal government will allow more to get accomplished."
From a multifamily occupancy perspective, Urban Atlantic president Vicki Davis says changes in administration typically benefit local rental markets. On the affordable housing side, though, she said there is some worry that it could become less of a priority.
"Part of the platform could be less focused on affordable housing, so it depends how that goes," Vicki, above, said. "It hasn’t historically been that way in Republican-led governments, but there certainly is an exposure there and I think there is some concern in the industry."
Oxford Properties SVP Chris Mundy, right, says he hopes any increased infrastructure spending would allocate much-needed capital to fix the Metro system.
"If there's a commitment made to the Metro system," Chris said, "that could be beneficial to everyone who lives in the area."
The event began with an in-depth market outlook from NGKF's Greg Leisch, who gave us his thoughts on Trump's victory last week.
On the multifamily side, Greg said the concern about an overbuilt pipeline seems to be behind us as occupancy rates remain healthy, though he says rent growth has been anemic.
Greg said there are opportunities to be found in the multifamily market. Developers should embrace the sharing economy with things like short-term rentals, cater to empty nesters who want larger units, accommodate telecommuters who want space to work at home, renovate well-located Class-B and C assets and develop amenitized buildings near Metro stations.
On the office side, Greg says the worst of the absorption drought is behind us. Improving job growth has demand going in the right direction, he says, but his projections are tempered because of continued densification and meager GSA activity. He also said neighboring jurisdictions should work together more to bring companies to the area.
"We could do so much better if we had regional cooperation to attract tenants from outside the region," Greg said.