CRE Industry Now Waits for Senate Outcome

Now that the Presidential results are…final?—CRE attention has turned to the Senate, where the majority for the next cycle will be determined by run-off elections in Georgia. George Smith Partners’ hosted a virtual conversation with Jay Rollins, co-founder at JCR Capital, and discussed the implications of the election for the commercial real estate industry. According to Rollins, the future hangs on the outcome of the two run-off races in Georgia.

“The base case assumption of a Biden Presidency and a Republic Senate for the commercial real estate industry could be the best outcome that we could have hoped for. If the Senate is controlled by Republicans, it could give Biden a lot of cover, and this could be a good thing for Biden because there will be a lot less pressure from the far left to get things done,” Rollins said in the conversation, which was hosted by George Smith Partners’ principal and co-founder Bryan Shaffer. “With a one-seat advantage, Mitch McConnell will control what goes to the floor.”

The industry has a few major concerns that could swing with the Senate majority and a Democratic White House, like taxes and 1031 exchanges. If the Senate remains a Republican majority, those issues will not likely make it to the floor. “A lot of the things that people in our industry were scared of, like massive tax increases, changes in the 1031 exchanges depreciation, are all going to be really hard to do. So, I think that we are in a fine spot,” said Rollins. “I think that people are going to respond in the same way that they responded in the stock market. The rhetoric is going to be tamped down, we will continue to have Powell with low rates and we are going to have a stimulus package. I think this is really good news for our industry.”

Rollins also opined on what the election has signified for the political ideology of the country—and what that could mean for future policy that could impact the CRE industry. “There was a movement in this election to redefine the democratic party as democratic socialist and that the country wanted to go more to the left. That was the narrative, and that narrative was rejected,” he said. “It was rejected by how close this election was in terms of raw numbers and by the fact that the Republicans picked up five seats in the House. The democrats need to know that the country doesn’t want to move that far left. They are going to have to get back to bread and butter issues.”

Rollins also argued that the election outcome could mean a longer-term trend for the democratic party. “While the headlines have been on this election, I think the story behind the story is that the country is not going as far left as just a month ago,” he said. “For that reason, the democrats in power are not going to go along with radical ideas because they want to keep their job, and the people have spoken that they don’t want radical ideas.”