Two of President Biden’s executive orders will affect commercial real estate investments over the short- and long-term. According to a Bisnow story, Biden’s moratorium on multifamily evictions and mortgage foreclosures may depress overall incomes for lending institutions, investors and property owners in the short term.
Twenty-eight percent of U.S. renters have unpaid rent bills from previous months, according to a recent Apartment List survey. While being unable to pay one’s rent is catastrophic and deserving of sympathy, the order potentially forces investors to subsidize the rent for tenants and cut deals with creditors of all kinds, from banks to maintenance staff. The National Multifamily Housing Council and National Apartment Association have joined in a request for rent assistance to help property owners, and stated that Biden’s proposed American Rescue Plan would not do enough to repay them for back rents.
Another executive order rejoining the U.S. on the Paris Accords, which aims to reduce greenhouse gas emissions in a variety of areas, requires significant investment from commercial property owners. Residential and commercial buildings accounted for 39 percent of all energy consumption in 2019, and reducing the emissions for these will likely result in new building codes and standards that current and future projects may be required to meet. The bright side of this is that the requirements will likely be phased in over time and there may be a waiver or exception program, in addition to government subsidies of different types. However, benchmarks and reporting requirements may be added to accounting procedures.