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Shutdown could negatively impact the CRE industry

On Behalf of | Jan 16, 2019 | Commercial Real Estate

The ongoing partial government shutdown is negatively impacting the commercial real estate sector in Texas and across the U.S. Multiple federal agencies and government contractors play an important role within the industry. When they are not at work or are greatly short-staffed during the shutdown, their absence can harm commercial real estate businesses.

According to a report in Bisnow, the shutdown is causing harm to commercial real estate companies in multiple ways. Small businesses are unable to secure financing through the Small Business Administration, which has stated that it will remain closed until appropriations are made. Banks also lend money to fewer companies during shutdowns.

The U.S. Department of Housing and Urban Development is working with a skeleton crew. The Federal Housing Administration has stated that while it will make new loans through its single-home program, it will not commit to any loans for multi-family projects at this time. HUD is also not able to enforce its regulations and to complete safety inspections during the shutdown. With approximately 800,000 federal workers currently without paychecks, the retail sector can suffer financial harm. Companies that rely on government contractors may be unable to complete projects on time.

If the shutdown continues much longer, the commercial real estate industry is poised to suffer even more harm. Government tenants of leased space may be unable to pay their rent for several months. Other issues may also arise. Companies that are in the commercial real estate industry might want to consult with experienced attorneys who might be able to help their clients to plan how they might be able to weather the shutdown if it continues for a lengthy period of time. The attorneys might also help their clients with adjusting their budgets and making other changes that might help them to streamline their operations.


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