The direct impact of the federal government shutdown on commercial estate will be limited, although broader economic effects could still ripple through the sector, Marcus & Millichap reported. A newly published Research Brief says the greatest potential impact on CRE would come from a pullback in spending or hiring if business and consumer confidence weaken.
Most tenants and commercial property operators and owners fulfill their daily operational needs without directly interacting with the federal government. “A notable exception would be the financial subsidies provided by the Department of Housing and Urban Development to private landlords to help low-income renters,” according to Marcus & Millichap. “HUD payments could be impacted if the shutdown lasts more than 30 days,” as occurred in late 2018 and early 2019.
Meanwhile, the Research Brief notes, “from an investment sales perspective, financing is still available, including from Freddie Mac and Fannie Mae. This means that transactions can close.”
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