Glenn Youngkin's Experience Leading Carlyle Group Has Many In CRE Cheering His Victory
The political leadership in Virginia will soon flip parties, with Republicans sweeping all three statewide races in Tuesday's election, and many commercial real estate executives are optimistic about the state's new leadership.
Several top Northern Virginia real estate executives who spoke to Bisnow Wednesday pointed to Youngkin's private equity background and his pro-business agenda as a good sign of what his election will mean for the commonwealth's economic future.
Industry leaders say they are optimistic about Youngkin's positions on cutting taxes, rolling back regulations and restricting unions, and they think he could help attract more businesses to the state that will create demand for commercial real estate. On other issues that matter to the real estate industry like housing and transit investments, experts said they are still waiting to see more details on Youngkin's plans, as they weren't a focus of his campaign.
"Glenn Youngkin has got his success with the Carlyle Group, he understands business," Shooshan Cos. Chairman John Shooshan said. "He's very engaging. I think he's going to reach out to the business community."
Shooshan, whose real estate firm owns a large portfolio of office, residential and retail in Arlington, described himself as a political independent and said he supported Youngkin in the race. Public campaign finance records show he contributed $7,500 to Youngkin's campaign last month.
Shooshan wasn't the only commercial real estate leader who contributed thousands of dollars to Youngkin's campaign. JBG Smith, the REIT that is building Amazon HQ2 and controls most of the surrounding National Landing neighborhood, contributed $5K last week through a political action committee. Federal Realty CEO Don Wood, whose REIT owns over a dozen retail properties in Northern Virginia, personally contributed $5K last month.
Youngkin's economic agenda includes a series of tax cuts he proposed in August. He pledged to eliminate the state's grocery tax; suspend a recent gas tax hike for one year; provide a one-time tax rebate of $600 for joint filers and $300 for individual filers; cut taxes on veteran's retirements pay; and end "runaway property taxes," according to his campaign's website.
He also set a goal of adding 400,000 jobs and growing 10,000 startup companies. He said he plans to do this by cutting regulations on businesses, stopping "forced unionization," launching a job training program, enacting a small-business holiday and ending taxes on Paycheck Protection Program loans.
Peterson Cos. CEO Jon Peterson, who has supported Republicans for past Virginia elections, wrote in a statement to Bisnow that Tuesday was "obviously a good night for Republicans." His statement mentioned that in addition to Youngkin's election, the party won the races for lieutenant governor and attorney general, and it flipped the House of Delegates and won back seats in the Senate.
"Businesses and workers alike want to advance our pro-business environment with lower taxes and by protecting our Right to Work law which will continue to drive economic development activity," Peterson said.
Northern Virginia Chamber of Commerce Vice President of Government Relations Clayton Medford also referenced Youngkin's support of Virginia's status as a right-to-work state, a policy that limits unions by allowing workers to opt out of paying union dues.
"Our members believe Gov.-Elect Youngkin's commitment to keeping Virginia a right-to-work state is critical to our economic growth," Medford wrote in a statement. "We look forward to working with his administration to invest in our public school systems, improve our transportation network, and continue to grow the talent in Northern Virginia to keep us competitive nationally and globally."
Buchanan Partners principal Bob Buchanan, a developer with a large Northern Virginia portfolio who also serves as president of the regional organization 2030 Group, said he thinks Youngkin's private sector experience will help him attract new businesses to Virginia.
Northern Virginia has led the D.C. region in recent years in luring big companies from other parts of the country, landing big names including Amazon, Microsoft, Google and Nestlé. Buchanan said past Virginia governors, including McAuliffe, have taken an active role in courting businesses by flying out to meet with executives and selling Virginia as a destination.
"Hopefully Glenn will follow suit, because as a business leader you don’t wait for the world to come to you, you go out and generate what you feel is plausible to attract people to come to work for you or to attract contracts," Buchanan said. "I’m in the private sector, and it’s refreshing to see some people in the private sector wanting to get into politics."
Shooshan also said he thinks Youngkin will help Virginia lure companies away from other parts of the D.C. region. He said Clark Construction, which has an upcoming lease expiration at its Bethesda headquarters and appears likely to vacate, could hypothetically be a company that could cross the river into Virginia.
"At the end of the day, it’s competition," Shooshan said. "When you leave Bethesda and move to Tysons or Arlington, you’ve moved to a different state, and someone like Youngkin and his leadership team are going to look at groups like Clark as coveted prizes to get them to relocate to Virginia."
Cityline Partners Managing Director Donna Shafer, whose development firm has two large Tysons projects with planned office space that could benefit from a corporate relocation, said she thinks Youngkin will benefit Virginia's economic growth.
"Glenn Youngkin was an integral part of one of the most successful private equity firms in the country," Shafer wrote in an emailed statement. "With that background, I trust he’s up to the task of ensuring Virginia continues its reign as one of the top states in the country in which to do business, and continues to prioritize economic development."
NAIOP Northern Virginia President Martha Marks said some of the organization's board members know Youngkin personally, and she thinks he will be good for Virginia's economy.
"There is no doubt that he will carry on the pro-business environment that has made the Commonwealth of Virginia, and Northern Virginia in particular, a leader of economic development activity in the United States," Marks said.
While many real estate leaders agree that Youngkin will have a pro-business mindset as governor that could spur economic growth, he has given few clues as to his position on other policies that affect the industry, like housing and transit.
Youngkin's campaign website says investing in roads and highways is one of his priorities, but it doesn't mention rail infrastructure investments or public transit. Virginia has invested hundreds of millions of dollars in the Silver Line's expansion of the D.C. Metro system, and in March the state reached agreements for a $3.7B expansion to its passenger rail system, including Amtrak and VRE. These projects often benefit commercial real estate as they create opportunities for transit-oriented development.
"You can’t have economic development unless you’re investing in transportation infrastructure," Buchanan said. "It’s not just roads, it’s not just transit, it’s smart streets that anticipate more people are going to be biking and walking."
George Mason University Center for Real Estate Entrepreneurship's Eric Maribojoc, who also said he thinks Youngkin would benefit the industry by cutting taxes and lowering regulations, said his plans for transit investments are less clear.
"The commonwealth has invested a lot in transit both with Metro as well as the VRE rail line, and I think all those are good investments that I hope would be continued," Maribojoc said. "Continued support for transit and infrastructure I think would be a good thing, but we haven’t seen the details of that in his proposals yet."
Maribojoc also said he hasn't seen much detail from Youngkin on housing, another issue he said is important to commercial real estate.
Northam's administration and the General Assembly invested over $70M during the past fiscal year into the Virginia Housing Trust Fund, which provides financing to create or preserve affordable housing. Youngkin's campaign website doesn't appear to include a position on affordable housing.
"Over the last couple years Virginia has increased its allocation to invest in affordable housing, so to what extent priorities like those change I think a lot of people will be waiting to see how that plays out," Maribojoc said. "I don’t see any particular proposals yet from his platform regarding that, so one would hope he would support increasing housing supply as well as making sure we have housing affordability."