Why You Should Invest in Commercial Real Estate Now That the Presidential Elections Are Over
With the 2024 U.S. presidential elections behind us, the dust has settled, and the political uncertainty that often accompanies election seasons is starting to dissipate. For investors looking to make strategic decisions in the wake of political change, commercial real estate (CRE) is an asset class worth considering — especially now. Whether you’re a seasoned investor or just starting to explore real estate, here are several reasons why now is an ideal time to invest in commercial real estate.
1. Stabilized Political Environment
One of the most significant impacts of the election cycle is the uncertainty surrounding policy shifts and regulatory changes. With the election now concluded, many of the unknowns that influence markets have been resolved. A predictable political environment helps reduce volatility, which can benefit commercial real estate investors. Clear direction on fiscal policy, tax laws, and business regulations provides a sense of stability for long-term investments.
With a more predictable landscape, it’s easier to project future economic conditions, such as interest rates and government spending, both of which directly impact real estate markets.
2. Interest Rates May Stabilize or Decrease
Although interest rates were a major concern leading up to and during the election season, the Federal Reserve’s actions will likely become more predictable after the elections. In response to a post-election economy, the Fed may pause interest rate hikes or even begin to reduce rates, particularly if inflation continues to moderate.
For commercial real estate investors, lower interest rates mean less expensive financing. This is particularly attractive for those looking to leverage debt to finance new acquisitions or refinance existing properties. Lower borrowing costs increase cash flow potential, improve investment returns, and make commercial real estate more accessible for both institutional and individual investors.
3. Long-Term Economic Growth Opportunities
Regardless of political affiliation, the U.S. economy tends to follow long-term cycles of growth. Many commercial real estate sectors, such as office buildings, industrial spaces, multifamily units, and retail properties, perform well during periods of economic expansion. The end of the election cycle marks the beginning of a new phase in the economy, and businesses tend to have a clearer sense of direction post-election.
Investing in commercial real estate can provide a hedge against inflation and a reliable income stream through rental yields, particularly in growing urban areas or regions experiencing economic diversification. Moreover, commercial real estate tends to appreciate over time, especially in areas with strong infrastructure investment, technological growth, or population influx.
4. Regulatory Clarity and Policy Continuity
Elections often bring policy changes, some of which can significantly impact the real estate market. The aftermath of an election period allows investors to better understand the direction of policy changes, especially when it comes to taxation, zoning, environmental regulations, and housing laws.
For example, many investors may be closely monitoring policies related to Opportunity Zones, tax incentives for real estate investors, or the expansion of infrastructure projects. A stable political environment means that any changes in policy are more likely to be gradual, giving investors more time to adjust their strategies.
5. Increased Demand for Commercial Spaces in Growing Sectors
While the overall economy may have been impacted by the uncertainty of the election season, certain sectors within commercial real estate are still experiencing robust demand, regardless of the political outcome. Here are a few examples:
- Industrial Real Estate: With the continued growth of e-commerce, demand for logistics and warehouse space remains strong. Supply chain issues are still driving businesses to invest in distribution hubs.
- Multifamily Properties: Housing shortages in many U.S. cities are leading to increased demand for multifamily units. Rental demand is strong, making multifamily investments an attractive option.
- Healthcare Facilities: The aging population and a growing need for healthcare services make medical offices and senior housing increasingly attractive for investors.
- Renewable Energy and Green Building Trends: Sustainable building practices are gaining momentum. Investing in energy-efficient properties or those in transit-oriented developments can yield long-term benefits.
6. Reduced Volatility in Stock Markets
Political elections can often create turbulence in the stock markets, leading investors to seek safer or more stable alternatives. In contrast, commercial real estate is generally less volatile than the stock market and offers more predictable returns.
Real estate investments, particularly in commercial properties, can provide a steady cash flow through rents, making them an attractive option for income-focused investors. Additionally, commercial real estate is a tangible asset, which provides some protection against market fluctuations compared to digital or abstract assets like stocks or bonds.
7. Tax Advantages for Investors
Commercial real estate offers a variety of tax incentives that are particularly valuable in a post-election environment. Some of these include:
- Depreciation Deductions: Property owners can deduct depreciation, which helps offset rental income and reduce taxable earnings.
- 1031 Exchange: Investors can defer capital gains taxes on the sale of commercial property if the proceeds are reinvested into another qualifying property.
- Opportunity Zones: Investing in designated Opportunity Zones can result in significant tax benefits, including the deferral of capital gains tax.
After an election cycle, the likelihood of tax law changes may be clearer, allowing investors to make strategic decisions to maximize their tax benefits in the coming year.
8. Availability of CRE Financing Options
After the election, financial institutions often reassess their lending criteria. With the elections behind us, lenders are more likely to offer competitive terms on loans, especially for low-risk, high-value properties. Additionally, some lenders may offer more favorable terms for properties in growth markets or industries that are thriving post-election.
For investors with strong credit and solid business plans, this is a great time to secure financing for new acquisitions or development projects in the commercial real estate sector.
Conclusion
The end of the election season marks a new chapter in the U.S. economy and commercial real estate market. With reduced political uncertainty, potential stabilization in interest rates, and new opportunities in growing sectors, the current climate is ripe for CRE investment. Investors who are looking for long-term growth, stable returns, and potential tax advantages should consider taking advantage of the opportunities that exist now that the election has concluded.
Commercial real estate remains one of the most reliable asset classes for building wealth over time, and the market’s fundamentals — driven by factors such as demographic shifts, urbanization, and technological advancements — remain strong. If you’ve been waiting for a more stable environment to dive into the commercial real estate market, now might just be the perfect time to take action.
