- The Washington Times - Wednesday, February 3, 2010


Last week’s economic re -port by the Depart -ment of Commerce that the economy grew by 5.7 percent in the fourth quarter of 2009 gave us all a glimmer of hope in an economic season that has otherwise not lived up to its promise of recovery. But hope without traction is usually short-lived. We need traction.

Commercial real estate will play a critical role in how quickly the economy can gain that traction and push through toward real recovery. The numbers speak for themselves: In 2009, the office building industry contributed $118.4 billion to the U.S. economy and office building operations alone support more than 1 million jobs. This impact is felt strongest on a state and local level where real estate accounts for 70 percent of local tax revenue. But commercial real estate is experiencing its deepest recession since the 1990s with national vacancy rates approaching 20 percent.

Yesterday, commercial real estate practitioners throughout the country met with members of Congress on Capitol Hill to discuss the impact the industry has on the overall economy and some of the legislative possibilities and pitfalls before us.

Energy is on everyone’s mind, and how the president and Congress go about crafting their new energy agenda could make all the difference in how quickly the economy rebounds. A mandated cap-and-trade plan coupled with aggressive energy requirements on new and existing buildings will equate to a new tax on real estate and will slow any traction we have gained. The fact is, we need to reduce energy consumption and manage energy better - that’s a given. What does work are aggressive tax incentives, not mandates, for energy-efficiency upgrades as well as conservation and demand-side management tools. These tax incentives help building owners make the financial case to implement energy-efficiency upgrades by lowering upfront costs and decreasing the payback period - vitally important in investment properties. In this economy, it is extremely difficult to access capital funds to finance the energy-efficiency retrofits that result in job creation and lower greenhouse gas emissions.

And since we’re on the topic of taxes, there’s a misperception by many legislators that commercial real estate is an industry of deep-pocketed investors and developers, and is an easy target when the call to raise taxes goes out. In truth, the majority of commercial real estate professionals are property managers and owners, asset managers, engineers and architects. Raising taxes on commercial real estate - whether through carried interest, capital gains or other means - would all but break commercial real estate, the backbone of any thriving economy and would kill the entrepreneurial drive and investment that we must get back if we are truly going to grow jobs and this economy.

Jim Peck is chairman and CEO of the Building Owners and Managers Association (BOMA) International and senior director of CB Richard Ellis.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide