This election season has drawn an unprecedented amount of coverage for the sheer number of issues the candidates have addressed, the infamous gaffes and the current state of the nation. From tax hikes to the regulatory environment and unemployment to social issues, President Barack Obama and former Massachusetts Governor Mitt Romney have sparred for months on issues of vital importance to Americans.
Given the ongoing economic downturn, the result of tomorrow’s election will no doubt affect the American business climate for the next four years and may leave a lasting impact on the business community for years to come.
All businesses, from small, family-owned operations all the way up to multi-billion dollar corporations, are watching this election closely as the outcome will undoubtedly affect the way they do business. The clients we work with at Posternak Blankstein & Lund LLP in the commercial real estate field have been particularly wary throughout the election and will be watching tomorrow’s results closer than most.
During the past several months, commercial real estate development in the Greater Boston area has slowed, due in part to the current economic climate, but also to the uncertainty associated with the crossroad that is this election. On one side, we have a candidate who’s perceived to be pro-business and supportive of entrepreneurs, with a corporate background some would call impressive and others may consider suspect. On the other, there’s an incumbent who is focused on helping the “little guy” and bringing regulation to big business, an approach some would consider anti-business and others may think of as leveling the playing field. While these candidates disagree on nearly every major issue, the economic climate is the one issue that’s keeping my clients up at night and even causing developers to put the brakes on projects until after the ballot is counted and a victor is declared.
Deals On Hold
Commercial real estate developers in the area have been on the fence when it comes to undertaking big deals or breaking ground on new developments, no matter the size. With the unpredictable business environment and the possibility of new leadership in the White House, and perhaps the Senate and the House as well, developers are wary, especially when it comes to tax rates, regulations and the deficit. Should Romney win the White House, many developers may see that as a “green light,” as Romney is expected to incentivize investment, development and job creation. If Obama stays in the White House, developers won’t necessarily see a “red light” and halt production, but many of my clients say they will likely remain in the cautious “yellow light” stage, waiting to see what the president has in store for a second term.
Boston, often known as the hub of innovation, was recently cited in an Emerging Trends in Real Estate Forecast survey by the Urban Land Institute as one of the cities where the commercial real estate recovery will take off in 2013. While the area remains ideal for technology and biomedical businesses to grow, and they will surely continue to expand no matter the outcome tomorrow, it is impossible to predict what next year will hold in terms of real estate recovery, or any recovery for that matter, until we know which camp will be leading us beyond this crossroads.
If Obama is reelected, commercial real estate leaders will look to the White House for signs of an economic recovery, including fewer unemployed, less spending and a smaller deficit, among other signs, before giving the ‘OK’ for major projects, especially those that require significant investment in terms of time, money and construction. These developers are expecting an economic recovery should Romney be named the next president and will likely give the ‘OK’ much sooner for big projects, but it will be interesting to see if our former governor will be able to deliver this much-promised economic turnaround and how soon.
The business community remains tense in the lead-up to tomorrow’s vote, on which so many potential changes are focused, as well as the U.S. Senate election in Massachusetts, Senatorial which could sway the Senate and further impact the business environment not only in thecCommonwealth, but nationwide. My clients, and others in commercial real estate, will be anxious when they approach the stoplight tomorrow waiting to see what color that light will turn.
Mike Rubin is a partner in Boston-based Posternak Blankstein & Lund LLP’s corporate and real estate departments.
