Impacts on commercial real estate
On October 1, 2025, the first day of the closure of the US federal government, a man is reflected in the US Congress building windows while running at the National Mall at Washington DC.
Andrew Caballero-Reynolds | AFP | Getty Images
A version of this article was first published in the CNBC Property Play news bulletin with Diana Olick. Property Play includes new and developing opportunities for real estate investors from individuals to venture capitalists, private capital funds, family offices, corporate investors and large public companies. Be a member To get future editions directly to your incoming box.
When the government is closed, real estate observers tend to focus on the impact on the housing market. The sale of thousands of houses will be postponed potentially because the Federal Flood Insurance program is no longer able to issue new policies; The Federal Housing Administration, the Ministry of Gazi Affairs and the Ministry of Agriculture may slow or suspend the mortgage transactions; And IRS may not process tax transcripts or income verification documents so quickly.
However, the effect on commercial real estate is much more comprehensive, although not so urgent. The closure of the government delays the government’s data on the economy. It causes uncertainty in financial markets and therefore, especially for small enterprises, commercial real estate. This also shakes the trust of the investor. Finally, but most urgently, it causes a decline in consumer demand for certain sectors.
According to a post of Commercial Real Estate Alliance (CREA), potential results include:
- A decrease in demand for CRE because it delay or canceled or cancel the projects and governmental institutions rental and development projects.
- More difficulty in obtaining and trading for CRE investors and developers in an environment of uncertainty and market variability.
- Delayed approvals of permissions or other government signatures required for CRE development projects.
Economic data
The closure of the government meant that the Office of Labor Statistics was not published in September. This affects investors who need such data to decide on the status of the economy and interest rates.
If the closure continues, the population office will not publish economic data on construction expenditures, housing beginnings and construction permits. These are all keys for very family investors.
CRE FINANCE
Market uncertainty leads to a firing loan from lenders and potentially higher risk premiums in agreements, especially if it is related to federal programs.
Real Estate Private Capital and Debt Fund Manager Northwind Group’s founder and manager Ran Eliasaf, “In general, investors and lenders are looking for stability, especially when there is political instability, investment decisions and lending should always be more prudent in lending,” he said. “We think the biggest risk of insurance is the political risk. This is valid at the federal level such as the closure of the government and applies at the local level, such as the election of the New York City Mayor.”
Retail, accommodation, housing for the elderly
Looking at certain sectors, the retail and accommodation sector will see the fastest effect because they are completely consumer -oriented. Consumer expenditures may fall, especially in regions where federal employees are dense, when employees are free and even dismissed.
“I think this is a great risk, Christ said Christine Cooper, US Chief Economist and General Manager of Costar, a commercial real estate information and analysis company. “Imagine small retailers and cafes. Profit margins are very low, so if they lose their customers, they will be more likely to be interrupted. They will not be able to meet this and you will see some closes in a very short time.”
There is a similar situation in the accommodation sector, where state services and closure of national parks will affect tourism. Washington DC’s tourism, the administration of the national guards and other federal troops have already taken a blow. Another attack against this city.
Qualified care facilities and elderly care facilities may also have delays in the agreement. These use the financing of the US Department of Housing and Urban Development (HUD) as well as affordable housing projects.
“According to me [for] Thanks to HUD financing, the queue will grow. Applications will not be processed, “Eliasaf said.
Federal Cre
The Federal Commercial Real Estate Market will take the biggest blow due to the postponement or stopping of the sales of these properties managed by the General Services Administration (GSA). Federal agreements, including new leases and property maintenance agreements with tenants, will also have to wait.
Eliasaf, “This will affect the agreement. VA to secure the HUD financing, government -supported GSA to bargain to rent a supported GSA will definitely face some problems,” he said.
Depending on how long the closure will last, GYOs, which serve federal institutions such as Easterly Government Properties and JBG Smith, are predominantly dependent on government rent payments.
Easterly, in an application made to the SEC earlier this year, said that our income depends on the rent payments we received from GSA and the US government tenant institutions. ”
Structure
If the closure of the past is a guide, the construction sector will be affected. A report of ConstructConnect, an information and technology company for the construction sector, says that the closure of the government in 2013 has affected federal infrastructure projects due to the stopping of the Environmental Protection Agency’s leave examinations. Contractors and trade experts rely on these permissions to activate the crew.
According to the report, the closure in 2019 “Federal construction expenditures froze billions of dollars, approvals for projects affiliated to the Ministry of Transport were stopped and the tender time schedules were interrupted, which was interrupted by electricians, plumbers and concrete experts.” According to the report.
