What will happen to your commercial real estate market should Congress and the White House let the country fall over the “fiscal cliff?”
It mostly depends upon where you practice commercial real estate, according to a research report published by Cassidy Turley.
For instance, if you happen to sell commercial real estate in St. Louis, the fiscal cliff could be troubling. That’s because a series of what most people refer to as “draconian” budget cuts will kick in. St. Louis will be one of those markets hit particularly hard by these budget cuts, according to Cassidy Turley.
But the Midwest city won’t be the only one. According to Cassidy Turley, 23 out of 30 metropolitan statistical areas that the company tracked would fall back into at least a mild recession should the fiscal cliff be allowed to occur.
The good news? Cassidy Turley researchers have hope that Congress and the White House will reach a deal to avoid the fiscal cliff. In fact, they say that the odds of the fiscal cliff actually happening are low.
Here’s how it’s worded in the Cassidy Turley report: “It is almost an irationally pessmistic view to assume lawmakers will not do what they need to do in order to prevent another recession.”
But if the fiscal cliff happens? Several Midwest cities would be exposed to negative financial ramifications.
For instance, General Electric boasts a strong presence in Cincinnati. Defense contractors call the region home. The budget cuts could cause these big players to suffer. Cassidy Turley predicts that if the fiscal cliff happens, the Cincinnati metropolitan area would suffer a 1.5 percent decline in its gross metro product and lose about 4,000 jobs. The market would also see more than 168,000 square feet in negative net absorption.
How about in Columbus? Cassidy Turley predicts that the fiscal cliff would cause this city to lose 3,600 jobs, pushing its unemployment rate back to more than 7 percent. In Indianapolis, the fiscal cliff would cause nearly 100,000 square feet of office space to return to the market, causing vacancy rates to rise 120 basis points to 20.6 percent.
In Nashville, almost 136,000 square feet of office space would return to the market if the fiscal cliff happens. That would cause vacancy rates in this sector to rise 30 basis points.
The fiscal cliff, though, would really hurt St. Louis. The St. Louis office market, for instance, would lose about 7,700 jobs, wiping out half of the employment gains it saw in 2012.
Again, the researchers at Cassidy Turley do believe that the fiscal cliff will be averted. Let’s hope so. Otherwise the Midwest will see a lot of lost jobs and rising vacancy rates.
