WASHINGTON, DC–It has been clear that Northern Virginia's commercial real estate community would benefit from the current regime in Washington, DC, with its focus on defense. A new research note from JLL drills into exactly where the most benefits will accrue.
This month Congress passed the Bipartisan Budget Act of 2018, a continuing resolution that extended funding at the FY 2017 level through March 23rd. The measure also raised spending caps for FY 2018 and 2019, for both defense and non-defense categories. The caps for defense spending saw a boost of $79.9 billion (14.6%) for 2018 and $85.0 billion (15.1%) for 2019, JLL noted.
Then, the Trump Administration released its budget request for FY 2019, including an addendum that increased funding in accordance with the newly raised budget caps. The Departments of Defense with an increase of 13.2%, Homeland Security at 11.5% and a proposed increase of 11.7% for Veterans Affairs were the major beneficiaries. The newly raised spending caps made room for a few non-defense winners, too this time, namely Health & Human Services, Commerce, and Energy, JLL pointed out.
Just from this we can conclude that Northern Virginia's contracting sector will come out well. In particular, JLL said:
Recent releases from the Department of Defense suggest that cybersecurity and intelligence contracts will be a top priority, translating to contractor growth in the Route 28 South and Toll Road areas.
JLL also looked at the main non-defense beneficiary of the FY 19 budget as it is now proposed, which was Health & Human Services and its 10.5% increase. Within the proposal there is an additional $10 billion for combating opioid abuse and treating mental health disorders. JLL wrote that:
This funding could create growth within the Substance Abuse and Mental Health Services Administration headquartered in Rockville, Md., but is more likely to fuel grants and growth around the country in areas most impacted by the opioid epidemic.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
